Brazil's President Lula has made a significant move against the nation’s burgeoning online betting industry. On Friday, just before the general election on Sunday, he enacted a provisional measure that bans online betting sites in Brazil, effective immediately.
From October 6, all licensed betting sites will be blocked. Bettors are required to request the withdrawal of their funds by the day prior. Failing to do so means that the sites must return the funds to registered accounts between October 9 and October 14.
This provisional ban must be approved or amended by Congress within 120 days, but its immediate impact has left the nearly two-year-old licensed betting market in a state of shock. Regulus Partners highlighted that the sector, valued at around $5.7 billion in net revenue (projected at $6.3 billion for the first quarter of 2026), is facing a complete shutdown.
The note from Regulus underscored the confusion over how companies should manage their staff and long-term contracts in light of the ban.
In response to the abrupt announcement, one potential avenue for the industry is legal action. Betano, which identifies Brazil as its largest market, is assessing potential options and has announced plans to take legal action to defend its operational rights under its five-year license. This sentiment was echoed in a press release from part-owner Allwyn.
Regulus also pointed out that there may be grounds for a court to reverse the ban, as it could adversely affect federal tax revenue. They noted that banning a product which is specifically taxed could lead to significant financial consequences without any publicly available justification.
Between January and August, the Brazil Federal Revenue Service reported BRL2.11 trillion ($411.2 million) collected in gambling taxes, marking a 12% rise compared to the same period in 2025. Industry projections had anticipated revenues reaching BRL16 billion by the end of 2026, highlighting that many of the proceeds support critical sectors like education and healthcare.
The ongoing concerns for the industry are exacerbated by Brazil's notoriously slow legal processes. The legal challenges began shortly after the sector was approved in December 2024. In 2025, a labor union sought to eliminate the betting industry altogether, labeling it unconstitutional. The case has since stalled with no resolution.
Additionally, a lawsuit against digital sports betting through municipal lotteries raised alarms regarding the stability of the regulated betting market. Despite extensive political pushback, the betting sector had thus far remained relatively isolated from significant regulatory shifts until this recent measure.
Analysts from Regulus estimate that a prolonged ban is more likely than not, with an 85% chance of a multi-month blackout rather than an outright permanent ban. The potential economic fallout from such a blackout could be dire. There are fears that a Lula re-election followed by a PM defeat might lead to tighter regulations, potentially driving more business into the black market rather than protecting consumers.
Stakeholders like Allwyn and Entain have begun to assess the expected ramifications of the new ban on their Brazilian operations. Though Allwyn owns only a 36.75% stake in Kaizen Gaming, which operates Betano, it has stated that its previously projected EBITDA margins for 2026 are no longer applicable under the provisional measure.
Allwyn confirmed that Betano would continue efforts to expand into new markets, with plans to enter four additional countries in early 2027.
Entain, meanwhile, has maintained its FY26 group underlying EBITDA guidance but now anticipates a significant impact on its operations, stating that they complied with the provisional measure despite their disappointment over the lack of industry consultation prior to the ban.
The CEO of Kambi, Werner Bercher, expressed frustration over the ban, noting that Brazil represented only a small share of the company's total revenue and would thus have a limited financial impact on Kambi.
Other prominent operators had high hopes for the Brazilian market. Playtech, which was set to provide technology for bets through Caixa bank, had heavily invested based on expectations of strong growth. However, the firm declined to comment on the ban when approached.
Despite the investment that the likes of Flutter have made—most notably acquiring NSX for $350 million—they now face serious losses due to the abrupt measure. Flutter reported a potential $70 million revenue loss if operations remain suspended through the end of the year, along with a $20 million reduction in adjusted EBITDA.
As the landscape rapidly changes, multiple stakeholders are reevaluating their strategies in Brazil as uncertainty looms over the future of the legal betting sector.
