Entain CEO Stella David expressed confidence during the company's Q3 earnings call that Brazil’s regulated market for gambling will eventually reopen, despite the recent ban imposed by President Luiz Inácio Lula da Silva. The ban, enacted through a provisional measure on September 25, has temporarily halted licensed gambling operations, impacting Entain’s SportingBet brand among others.
The provisional measure must still be voted on by Brazil’s Congress, which will decide whether the ban becomes permanent. Since the measure's implementation, there have been calls for the Supreme Federal Court to reverse the decision, leaving many local employees without jobs.
David suggested that while licensed gambling might resume, it could be limited to sports betting only. During the earnings call, she said, “Clearly, we don’t know exactly what’s going to happen. At the moment, the provisional measure is for 120 days, at which stage it either gets ratified, changed, or revoked. We are planning for multiple potential scenarios. But ask me for my best guess. I think the market will reopen in some form or another and we will be back there.”
In Q3, Brazil’s group NGR for Entain fell by 36% against a backdrop of “disciplined marketing and player engagement in an increasingly challenging market” prior to the gambling ban.
David confirmed that Entain would adopt a cautious stance when considering a return to Brazil after the preliminary ban. “Prior to the market being shut down, we were already taking what we would call a pragmatic approach to making sure that we were investing in the right sort of customer and not chasing volume at any cost,” she explained. “That has proven to be the right thing to do because the fact that the market can be closed down with no notice does put you at a degree of risk if one doesn’t take a sensible approach.”
Previously, Stella reported that Brazil’s net gaming revenue (NGR) declined by 25% in the first half of the year due to a “highly adverse” sports margin in Q1, while CFO Michael Snape classified the Brazilian market as “incredibly difficult and unpredictable.” Snape noted that Entain aimed to avoid aggressive spending in Brazil, expressing hope for a recovery later in the year.
David highlighted that Entain is focused on profitable growth, leveraging the established brand strength of SportingBet as it awaits clarity on regulatory developments. She remarked, “I can’t predict what’s going to happen, but I think one of the things that I can say is our brand SportingBet is a great brand. It’s been around a long time in Brazil. If the market came back and it was sports only, then I think we’d be well set for that.”
The ongoing ban could impact Entain's profitability, and the company expects its full-year EBITDA to come in at the lower end of the £910 million to £960 million range. Excluding Brazil, the company anticipates online NGR growth of 5-7% for FY'26 on a constant currency basis.
On a brighter note, Entain’s online NGR from the UK and Ireland surged by 14% in Q3, exceeding expectations despite unfavorable sports results. Overall, group NGR rose by 2%, with online NGR increasing by 3% and 5% when excluding Brazil.
David attributed the market share gains in the UK and Ireland to significant improvements in the company’s brands and digital products. Initiatives taken over the past 18 months have contributed to these enhancements, including the launch of a refreshed Ladbrokes app.
Looking ahead, David shared concerns regarding the potential doubling of the UK’s machine games duty (MGD) as suggested in the Autumn Budget. She warned that this could lead to an increase in betting shop closures and job losses, arguing that raising taxes might actually reduce revenues for the Treasury in the long run. "Since this time last year, already 630 betting shops have closed across the industry," she observed.
David affirmed that Entain is well-positioned to weather any potential tax hikes, claiming, “We are the best, I believe, by far retail operator in this space, and we’ve continued to increase market share over time. If there were to be an increase in taxes, we would be a relative winner in the fact that we would gain market share in retail.”
