Brazil's presidential election is entering a critical second round, and the implications for the country's licensed betting sector remain uncertain. The incumbent leader, Luiz Inácio Lula da Silva, implemented a ban on regulated online gambling at the end of September through a provisional measure. Despite the market being operational for less than two years, increasing public disapproval and political criticism compelled Lula to halt the sector, pending a verdict from the National Congress on whether this ban will become permanent.
In the first round of the election, Lula secured 45.16% of the vote, falling short of the required 50% to win outright. In contrast, Flávio Bolsonaro, leader of the Liberal Party and son of the imprisoned former president, received 47.03%. A runoff is scheduled for October 25, necessitated by neither candidate achieving an outright majority.
Ramiro Atucha, CEO of Atucha Strategic Advisory, expressed concern that the runoff could negatively impact the betting industry’s pursuit of reversing Lula’s ban. In response to Lula's announcement, Brazil's main gambling trade bodies urged the Supreme Federal Court to lift the ban. Atucha commented, “Public opinion on betting is strongly negative right now, and the evangelical vote carries a lot of weight for both candidates. I can only imagine both of them doubling down against the regulated industry, and against online casino in particular, between now and the runoff.” He added, “Nobody wins votes defending bets in Brazil this month.”
The Liberal Party's win of 121 out of 513 seats in the Chamber of Deputies represents a notable victory for the betting sector, making it the largest bloc since 1990. According to Atucha, this stronger congressional presence may create challenges for Lula’s administration in maintaining the ban, as lawmakers could consider the long-term legal and economic implications.
“The people most exposed to that short-term, evangelical-driven pressure are the two presidential candidates,” Atucha stated. “Congress works on a longer horizon.” He noted that even though 121 seats are not enough to achieve a majority, this scenario suggests greater respect for existing agreements and increased awareness of the litigation concerning the industry.
Udo Seckelmann, a partner at Bichara e Motta Advogados, warned that a significant congressional opposition does not guarantee a rejection of the ban, as the situation remains subject to review by Congress and the judiciary. He highlighted that while heightened political momentum could lead to amendments or rejections of the provisional measure, the discussion now centers on whether prohibition effectively protects consumers or merely pushes them to engage with illegal operators.
While a Bolsonaro victory might appear advantageous for Brazil's gambling industry, it would not instantly revert the situation to pre-ban conditions. Bolsonaro criticized Lula’s decision as “populist, hypocritical and politically motivated,” yet he has expressed intentions to also restrict online casinos while permitting sports betting alone. Atucha remarked on Bolsonaro’s reliance on evangelical support, which is similarly opposed to gambling. He added, “I see him as more sensitive to pre-existing agreements. I have no hope of things returning to normal under Lula. If Lula wins, I only see further radicalization in the populist direction.”
Seckelmann echoed the uncertainty surrounding a potential Bolsonaro governance and its impact on the regulated market, noting that any incoming administration would face conflicting pressures. “A new government would have to weigh consumer protection against legal certainty, economic investment, tax collection, and the challenges of preventing shifts to offshore operations,” he stated.
The election outcome could profoundly affect Brazil's gambling sector, as lingering questions about the market's stability and investor confidence persist.
Atucha pointed out that while operators are eager to resume their activities, having previously invested considerable amounts, the more challenging issue is rebuilding international investor trust in Brazil’s institutional integrity. “That takes years and goes beyond gaming,” he said.
Seckelmann warned that the disruption from abrupt regulatory changes could deter future investors, creating a cautious landscape for commitments to Brazil. “Sudden policy reversals increase perceived regulatory risk and may affect future investment decisions,” he cautioned.
Many in the industry view Lula’s ban as a strategic electoral maneuver. Atucha described it as short-sighted, with ramifications likely to extend well into the future. “The ban is especially controversial since it was Lula’s government that brought regulated gambling to Brazil,” he added. “I think it was 100% an electoral decision. This is a purely populist measure built for the election cycle.”
Atucha believes that a return to regulated gambling could be more feasible under Bolsonaro, whose administration did not initially implement these regulatory measures. “He can let it come back without owning the original decision,” he noted, but regardless of who wins, some operators may face insurmountable challenges.
“For those doing well before the ban, a quick restoration is an opportunity,” Atucha concluded. “However, smaller operators who were already struggling will reach a point of no return during these months, and no government will be able to undo that.”
