As Brazil approaches the second round of its presidential election, the implications for the country's licensed betting sector remain uncertain. The incumbent president, Luiz Inácio Lula da Silva, imposed a provisional ban on online gambling at the end of September, just two years after a regulated market was established. This ban is now poised for congressional review, where lawmakers will ultimately decide whether to make it permanent.
In the first election round, Flávio Bolsonaro, leader of the Liberal Party and son of the imprisoned former president Jair Bolsonaro, garnered 47.03% of the vote, while Lula followed closely with 45.16%. Since neither candidate achieved the required majority, a runoff is set for October 25.
Ramiro Atucha, CEO and founder of Atucha Strategic Advisory, expressed concerns that the second round could hinder attempts to overturn Lula's ban. In response to Lula's announcement, Brazil's two leading gambling trade organizations petitioned the Supreme Federal Court to reverse the prohibition.
“Public opinion on betting is strongly negative right now,” Atucha stated. "In that context, I can only imagine both candidates doubling down against the regulated industry, particularly online casinos, leading up to the runoff. Nobody wins votes defending bets in Brazil this month."
The Liberal Party did achieve a significant victory, securing 121 of the 513 seats in the Chamber of Deputies, marking their largest influence in over three decades. Atucha views this congressional strength as a potential obstacle for Lula's government in maintaining the ban, arguing that lawmakers may consider the broader legal and economic implications.
“The people most exposed to that short-term, evangelical-driven pressure are the two presidential candidates,” he explained. “Congress operates on a longer horizon. A chamber where the PL has the largest bench since 1990, even with 121 seats still short of a majority, demonstrates more respect for agreements and legal ramifications."
Despite this, Udo Seckelmann, a partner at Bichara e Motta Advogados, cautioned against assuming that heightened opposition within Congress would lead to the ban’s rejection. He noted, “The first-round result will likely influence the political climate, but the key point is that the ban still requires congressional and judicial review. As opposition gains momentum, Congress may be more willing to amend or discard the provisional measure."
Atucha also remarked that while a Bolsonaro victory might seem advantageous for the gambling industry, it wouldn't guarantee a simple return to the previous regulatory environment. Bolsonaro labeled Lula's ban as "populist, hypocritical, and politically motivated," although he has previously indicated support for banning online casinos, allowing only sports betting.
“Bolsonaro relies on the evangelical vote as much as Lula does, and that demographic is openly opposed to gambling,” Atucha explained. “But of the two candidates, he appears more attuned to existing agreements. I have no hope of a return to normalcy with Lula. If he wins, we may see a further hardening of policies against the sector.
Seckelmann echoed the complexity of predicting a future administration’s policies, stating that any new government will have to balance consumer protection with the need for legal certainty and economic investment. He suggested that any new administration's direction would ultimately depend on its adopted policies and congressional backing.
The election results could have long-standing impacts on Brazil's gambling sector. Investor confidence may waver even if the regulated market returns, as Atucha noted, "It’s not just about whether operators want to come back—they paid BRL30 million per license and are now laying off workers. They want to recover their investments quickly. But rebuilding trust with international investors regarding Brazil's institutional integrity takes years and extends beyond just the gaming sector."
Seckelmann raised similar concerns, indicating that regulatory upheaval might deter future investments. “Operators can adapt to regulatory changes, but abrupt policy changes increase perceived regulatory risk and may affect future commitments,” he remarked.
Regarding Lula's ban, Atucha described it as an electoral tactic that could have prolonged consequences for Brazil’s gambling landscape. “This move is clearly a populist measure aligned with the electoral calendar. Lula’s administration initially regulated this market, so banning it less than two years later exhibits a lack of coherence in policy,” he observed.
Atucha suggested that should Bolsonaro win, he might find it easier to reinstate regulated gambling by not having to reverse decisions made by his own administration. "Bolsonaro can allow the market to return without taking ownership of the original decision made by Lula's government,” he added. However, he expressed concerns for smaller operators already struggling, who may not survive the prolonged uncertainty.
“For those doing well before the ban, a quick return remains a possibility,” Atucha concluded. “The smaller operators, though, may not withstand these delays and will inevitably face challenges that no government can rectify.
