As Brazil approaches a second round in its presidential election, the implications for the country's licensed betting sector are uncertain. The current president, Luiz Inácio Lula da Silva, recently imposed a ban on regulated online gambling, an industry only legalized less than two years prior. This ban, enacted through a provisional measure, will soon be reviewed by the National Congress, which will decide whether it becomes permanent.
Lula's performance in the first election round was noteworthy, albeit not sufficient for an outright win; he secured 45.16% of the vote. In contrast, Flávio Bolsonaro of the Liberal Party, son of the imprisoned former president Jair Bolsonaro, garnered 47.03%. With neither candidate reaching the required 50% for a conclusive victory, a runoff is scheduled for October 25.
Ramiro Atucha, CEO of Atucha Strategic Advisory, expressed concerns that this upcoming runoff could hinder the betting sector's attempts to overturn Lula's prohibition. Following the ban, Brazil's primary gambling trade associations urged the Supreme Federal Court to reverse the decision.
"Public opinion on betting is strongly negative right now, and the evangelical vote carries a lot of weight for both candidates," Atucha noted. "I can only imagine both of them doubling down against the regulated industry, particularly online casinos, as they head into the runoff. No one wins votes advocating for gambling in Brazil this month."
A significant development for the betting industry was Bolsonaro's Liberal Party winning 121 out of 513 seats in the Chamber of Deputies, marking its largest representation there since 1990. Atucha argued that this increased congressional presence could complicate Lula's efforts to maintain the betting ban, as lawmakers might prioritize the long-term economic and legal ramifications over immediate political pressures.
"Congress operates on a longer horizon," he added. "Even with 121 seats, significantly shy of the 257 needed for a majority, it is a group now more conscious of existing agreements and the implications of litigation."
Udo Seckelmann, a partner at Brazilian law firm Bichara e Motta Advogados, cautioned that a stronger congressional opposition to the ban does not guarantee its repeal. He explained that while the first-round election results will influence the political climate, the ban will still undergo congressional evaluation and judicial review.
"If opposition forces gain traction, Congress might be more inclined to amend or reject the provisional measure," Seckelmann stated. "However, the debate is evolving beyond party lines to consider whether prohibition is more effective than regulation in safeguarding consumers and countering illegal gambling."
While a Bolsonaro victory could theoretically benefit the gambling sector, it would not automatically restore pre-ban conditions. Bolsonaro labeled Lula's ban as “populist, hypocritical, and politically motivated,” yet he has also indicated support for a ban on online casinos, limiting legalization to sports betting only.
"He [Bolsonaro] is heavily reliant on the evangelical vote, which opposes gambling as strongly as Lula does," Atucha pointed out. "However, Bolsonaro may be slightly more amenable to existing agreements. I lack optimism for a return to normalcy under Lula, while Bolsonaro offers some hope. Given the pressure from the evangelical church and public sentiment, betting on either outcome feels precarious."
Seckelmann emphasized that predicting a Bolsonaro win would not directly correlate with the reinstatement of the regulated market, noting that any new government would grapple with conflicting demands.
"A future administration would need to balance consumer protection with the stability of legal frameworks, economic investments, tax income, and challenges related to preventing the migration to offshore operators," he remarked. The actual policies implemented by a new administration will influence congressional backing and the overall direction.
The election outcome could have enduring effects on Brazil's gambling landscape. If the regulated market is reinstated, questions regarding its stability and investor confidence will emerge. Atucha mentioned, "It is not about whether operators want to return. They invested BRL30 million per license and are currently laying off many employees. The focus is on rectifying the situation quickly and recouping investments."
The significant problem lies in restoring international investor trust in Brazil's adherence to institutional agreements and the licenses it grants, a process that could take years.
Seckelmann echoed these thoughts, noting that sudden regulatory changes not only impact current operators but also potentially deter future investors from engaging with Brazil's gambling market. "Regulatory risk increases with abrupt policy shifts, which can sway future investment decisions," he stated.
Industry insiders largely agree with Bolsonaro’s assertion that Lula's gambling ban was a strategic electoral move. Atucha described the decision as short-sighted, cautioning that it could create consequences lasting well into the future.
"Considering the timing and public sentiment around betting, I believe this was entirely an electoral tactic," he suggested. "It neglects the tax revenue already projected for the near term, job losses, and club sponsorships. This is a populist measure designed solely for the election cycle. It’s important to remember that the same government that legalized this market in January 2025 has now restricted it less than two years later. There is a lack of coherent policy behind such a move, primarily driven by the electoral timetable."
A potential silver lining may exist if Bolsonaro triumphs because he would not need to revoke decisions from his own administration. "He can reinstate the market without being tied to initiating it," Atucha noted. However, he cautioned that the damage could already be irreversible for many operators, regardless of who prevails in the election. "For entities that were thriving before the ban, regaining a foothold is still plausible. But for the smaller businesses that were faltering, recovery may no longer be feasible," he concluded.
