Brazil's President Lula has made a significant move against the country's burgeoning online betting industry. On Friday, just ahead of the general election taking place on Sunday, he enacted a provisional measure that immediately bans the operation of online betting sites in Brazil.
As of October 6, all licensed betting platforms will be blocked, forcing bettors to withdraw their funds by the day before. Sites that do not comply with withdrawal requests are obligated to transfer the funds to the registered accounts between October 9 and October 14.
While the measure is provisional, it still requires Congress' approval within 120 days to be ratified or modified.
The abrupt announcement has left Brazil's nearly two-year-old licensed betting sector in turmoil. According to Regulus Partners, "an industry now worth about $5.7 billion in net revenue terms ($6.3 billion run-rate GGR Q1/26) is facing an immediate and total shut-down."
"What licensees are supposed to do with their Brazil-facing staff and long-term contract liabilities has not been made clear, and the president does not seem to care," the firm added.
Legal action is on the horizon for the concerned parties. Betano, which has Brazil as its largest market and operates under a five-year license, is already considering "potential mitigants to the impact of the provisional measure" and is preparing for legal action to safeguard its interests.
Regulus also suggests the possibility of a court reversing the decision due to its implications on federal tax revenue. "Suddenly banning a product which is specifically and directly taxed clearly does threaten federal tax revenue, and no legally required justification or mitigation has been made public," the analyst report noted.
The Brazil Federal Revenue Service recently reported that BRL2.11 trillion ($411.2 million) in gambling taxes were submitted between January and August, marking a 12% increase over the same timeframe in 2025.
Industry predictions had estimated that the sector could generate a record revenue of BRL16 billion by the end of 2026. Regulus highlighted that a portion of these proceeds supports education, health, and sports in Brazil, presenting a strong argument against the constitutionality of the ban.
However, there are concerns about the lengthy legal processes in Brazil. The betting sector has been plagued by lawsuits since its approval in December 2024, with President Lula himself involved in the discussions. A notable case was introduced in 2025 by a labor union seeking to declare the online betting industry "unconstitutional" for various reasons, and its progression has been notably stagnant.
Another case targeting municipal lotteries aimed at providing digital sports betting was initiated by the Solidarity Party, depending on the Federal Court to address potential stability threats to the legal betting market.
Political resistance has been a recurring theme during the sector's short lifespan, with numerous senators proposing bills to either ban or heavily regulate betting advertising due to rising public concern over gambling addiction.
Until last week, such proposals were mostly speculative. Lula's anti-gambling stance is closely tied to the upcoming election, with hints about a potential crackdown on legal betting becoming increasingly pronounced.
Looking ahead, Regulus estimates a full ban on legal betting in Brazil as unlikely, with only a 5% chance that it will remain permanent. Analysts project an 85% likelihood of a multi-month blackout instead. They emphasize, "The scale of industrial damage that such a blackout can do should not be underestimated. There is also a clear danger that a Lula victory followed by a PM defeat will lead to tighter gambling regulations that drive the black market instead of protecting players."
Operators like Allwyn and Entain have begun assessing the potential fallout from the provisional ban. Although Allwyn owns just a 36.75% stake in Kaizen Gaming, the operator behind Betano, it has indicated that its previously projected adjusted EBITDA margin for 2026 will no longer be applicable if the ban remains.
"The exact impact would depend on various factors, including the timing and effectiveness of measures to reduce some costs that are not typically variable in the short term," the operator stated.
Betano has vowed to continue pushing forward with its expansion plans, aiming to enter four additional markets by early 2027.
Meanwhile, Entain restated its FY26 group underlying EBITDA guidance in the range of £910 million to £960 million, along with an online margin expectation of 21% to 22%. However, it anticipates that this measure could push its forecasts to the lower end of both ranges.
Entain expressed disappointment about the swift enactment of the measure without prior consultation with industry stakeholders, noting that its operations would comply with the ban.
Kambi CEO Werner Bercher shared his disappointment on LinkedIn over the weekend, observing that Brazil represented only "a low single-digit percentage of Kambi's revenue," and thus, the financial impact on the company would be limited.
Major operators and suppliers had invested significant resources hoping for growth in Brazil as it opened to licensed online betting. The measures taken by President Lula, however, are poised to significantly disrupt those plans.
On the downside, Playtech was counting on Brazil for substantial growth, particularly after securing a contract to provide technology for the state-owned Caixa bank's betting operations. CEO Mor Weizer had projected a launch in 2027 but declined to comment on the new ban when approached.
Conversely, some firms have exercised caution given the regulatory uncertainties. Entain's CFO noted in the H1 earnings report that Brazil remains “incredibly difficult and unpredictable,” stressing the importance of obtaining sustainable growth rather than pursuing quick profits.
Flutter, which invested heavily in Brazil with the $350 million acquisition of local operator NSX in September 2024, has expressed disappointment at the ban, halting its operations in the country. The company warned that if the ban lasts until the end of the year, it could incur a revenue loss of $70 million, with a $20 million reduction in adjusted EBITDA.
Brazil's complex legal and regulatory environment has placed the future of the betting sector in a precarious position, where the fate of many operators hangs in the balance.
