Brazil's President Lula has taken decisive action against the nation’s emerging online betting industry. On Friday, just before the general election scheduled for Sunday, he enacted a provisional measure that immediately shuts down all online betting operations in the country.
Beginning October 6, all licensed online betting sites will be barred from operating, compelling bettors to withdraw their funds by October 5. If users do not withdraw their balances, those sites are obligated to transfer the funds back to registered accounts between October 9 and 14.
While this measure is provisional, it requires approval from Congress within 120 days to either ratify or amend it. The abrupt announcement has sent shockwaves through the nearly two-year-old licensed betting sector in Brazil, which Regulus Partners estimates is valued at around $5.7 billion in net revenue. The sudden ban raises critical questions, particularly regarding the fate of operators' staff and ongoing contractual obligations, which remains unclear to industry insiders.
In response, Betano, the major operator with Brazil as its largest market, is exploring legal avenues to mitigate the impact of this ban and is readying for legal action to safeguard its rights as a five-year license holder. Additionally, Regulus pointed out that the decision could be legally challenged due to its potential threat to federal tax income. The report highlighted that between January and August, Brazil’s Federal Revenue Service collected BRL2.11 trillion (approximately $411.2 million) in gambling taxes, marking a year-on-year increase of 12%.
This sector's revenues had been projected to reach a record BRL16 billion by the end of 2026, with a portion of these proceeds allocated to support education, health, and sports across the country. Analysts suggest that this may provide a strong argument against the constitutionality of the ban.
The prospects for immediate legal recourse may not be sufficient to quell the industry's anxieties, as Brazil is notorious for its sluggish legal processes. Since the legal approval for the betting sector in December 2024—an initiative also backed by President Lula—the industry has faced numerous legal challenges.
In 2025, a labor union attempted to eliminate the online betting sector entirely by arguing that it was unconstitutional for various reasons. The case dissipated without any resolution, and similar concerns have arisen regarding municipal lotteries and potential impacts on the regulated betting market. Such legislative actions are compounded by a wave of political resistance to gambling, as public sentiment surrounding gambling addiction has hardened in the past two years.
Lula's anti-gambling stance is widely viewed as politically motivated, possibly aligning with his re-election campaign. Regulus estimates that a continued and full prohibition of legal betting in Brazil is unlikely, with only a 5% chance that it can be fully upheld. Instead, a prolonged blackout is deemed to have an 85% likelihood. Analysts warn that the industrial damage from such a blackout could be significant, potentially leading to regulations that could spur the black market.
Several operators have already released forecasts estimating the repercussions of the provisional ban on their Brazilian operations. Allwyn, which has a 36.75% share in Kaizen Gaming (operating the Betano brand), stated that its previous financial expectations would no longer apply if the ban persists. The impact would rely heavily on the timing and effectiveness of cost reduction measures.
Despite this, Betano indicated it would continue with its expansion plans into new markets, aiming to enter four more countries in early 2027. Meanwhile, Entain confirmed its guidance for fiscal year 2026, maintaining an underlying EBITDA range of £910 million to £960 million, although it anticipates the new measure may skew it toward the lower end. Entain expressed disappointment over the lack of consultation on this decision and emphasized compliance with the provisional measure.
Kambi’s CEO Werner Bercher expressed disappointment over this sudden market loss but acknowledged that Brazil represented only a small percentage of Kambi's overall revenue.
For many operators, Brazil presented a promising opportunity when the market opened up to licensed online betting. However, the recent ban poses significant challenges. Playtech, for example, had serious expectations for growth following its acquisition to supply technology for Caixa’s betting operations but refrained from comment on the provisional measure.
Some operators, like Entain, have approached the Brazilian market with caution, acknowledging its unpredictable nature and striving for sustainability rather than merely chasing revenue. Flutter Entertainment, which invested a substantial $350 million in acquiring local operator NSX in 2024, announced plans to cease operations in Brazil and anticipated a $70 million revenue loss due to the ban, alongside a $20 million reduction in adjusted EBITDA if the measure remains in force.
