Brazil's online betting sector has faced a severe jolt following President Lula's unexpected announcement of a provisional ban on all licensed online betting operations, effective immediately. This measure was issued on Friday, just before the general election slated for Sunday. Beginning October 6, all licensed betting sites will be blocked, and bettors must request the withdrawal of their funds by October 5. Failing that, sites must credit their users’ accounts between October 9 and October 14.
While the measure is provisional, it must be ratified or amended by Congress within 120 days. This abrupt action has left the nearly two-year-old legal betting industry in turmoil. Analysts from Regulus Partners highlighted the drastic nature of this decision, which they noted threatens a sector that has reached a net revenue of approximately $5.7 billion, with a projected gross gaming revenue of $6.3 billion for the first quarter of 2026. Regulus voiced concerns about the future of employees and long-term contracts within the industry, stressing a lack of guidance from the government on these issues.
Despite the bleak outlook, some companies are contemplating legal avenues against this sudden policy. Betano, a prominent operator which identifies Brazil as its largest market, announced it is assessing the potential fallout and preparing to take legal action to defend its rights as a licensed operator.
Regulus also pointed out that the ban could face court challenges, particularly since it directly undermines federal tax revenue generated from the betting sector. Between January and August, BRL2.11 trillion ($411.2 million) in gambling taxes were reported, marking a 12% increase compared to the same period in 2022. The industry had anticipated reaching a revenue milestone of BRL16 billion by the end of 2026, with part of these funds allocated to education, health, and sports in Brazil, enhancing the argument that the ban could be deemed unconstitutional.
In the past, Brazil's betting sector has encountered legal complications since its approval in December 2024. A significant case brought by a labor union in 2025 sought to declare the sector unconstitutional, but it has made little progress. Another lawsuit was aimed at restricting municipal lotteries from offering digital sports betting, projecting potential instability for the regulated market.
Political opposition has characterized the sector's brief existence, with several senators introducing bills to either ban betting outright or impose strict advertising regulations fueled by public concerns about gambling addiction.
Regulus estimates the chance of a continued full ban remains slim, around 5%, but foresees an 85% likelihood of an extended blackout impacting the sector. The potential ramifications of such a suspension are considerable, as it could engender heightened regulations that inadvertently promote a black market, especially if Lula is re-elected amid adverse political changes.
Operators including Allwyn and Entain have reported on how the provisional ban affects their business prospects in Brazil. Allwyn warned that its previously expected adjusted EBITDA margin of approximately 37% in 2026 would be unattainable if the ban is maintained. The company noted that this impact would rely on factors including the timing of efforts to curtail costs that cannot be quickly adjusted.
Betano remains determined to pursue its plans to enter new markets, targeting expansions into four additional countries by early 2027. On the other hand, Entain reaffirmed its expectations for a fiscal year 2026 group underlying EBITDA between £910 million and £960 million but signaled that the ban may pull revenues toward the lower end of their estimates.
Kambi CEO Werner Bercher expressed disappointment over the ban on LinkedIn, but noted that Brazil contributes only a minor fraction of Kambi's revenue, indicating limited financial impact. Meanwhile, Playtech, which expected the Brazilian market to drive growth through its technology partnership with the state-owned Caixa, declined to comment on the ban's implications.
Entain CFO Michael Snape previously characterized Brazil as unpredictable, emphasizing the importance of building a sustainable business in the country rather than pursuing aggressive revenue growth.
Flutter, which had invested heavily in Brazil by acquiring local operator NSX for $350 million, expressed discontent over the ban and its decision to cease operations, noting potential revenue losses of $70 million by year’s end and a $20 million reduction in adjusted EBITDA if the ban persists.
