Martin Carlesund, CEO of Evolution, has expressed his dismay at Brazil's sudden ban on licensed betting, labeling the decision a "total negative" for the gaming industry. This comes as the company seeks clarification on the future of the Brazilian market, which has just begun to recover since the regulated online market launched under two years ago.
President Luiz Inácio Lula da Silva announced the gambling ban in late September, prompting Evolution to temporarily shutter its São Paulo studio established last year. During the company's post-Q3 earnings call, Carlesund conveyed his astonishment at the rapid policy shift, noting, "I think that everyone is flabbergasted about the situation in Brazil. It's a total negative for anyone in this business."
He lamented the fact that a populist agenda could dismantle a regulatory framework that had only been in place for a year and a half.
The Brazilian betting sector is now waiting for a ruling from the Supreme Federal Court to determine if Lula's ban is unconstitutional. Carlesund indicated that the studio could reopen swiftly should the ruling favor the industry, stating that Evolution is "ready to accelerate" its operations in Brazil.
When asked about the implications of the ban on Evolution's Brazil revenue, Carlesund remarked that while the country is not entirely isolated, there remains uncertainty over the player base. He reiterated the need to monitor Brazil's evolving situation, saying, "It's hard to predict how this will play out, but the potential for reopening remains."
Despite these challenges, Evolution has maintained its full-year margin guidance. Addressing analyst concerns regarding profitability targets in the event Brazil contributes no revenue in Q4, Carlesund reassured the market that the company's outlook remains steady. In fact, Evolution's Latin American operations reported a 23.1% year-on-year growth in Q3, not yet reflecting the impact of the ban effective in early October.
On a broader scale, Evolution's Q3 net revenue climbed 3.7% year-on-year, reaching €526.1 million ($585.2 million), with adjusted EBITDA increasing by 2.7% to €345.9 million. Notably, this marked the first quarter since 2024 where all regions reported quarter-on-quarter growth.
While Latin America, Africa, and North America saw significant growth, Europe only grew by 0.4% quarter-on-quarter and experienced a 4.7% year-on-year decline. Carlesund described the performance in Europe as "not exciting," asserting that the company "should do better" in that region despite regulatory and taxation challenges that seemingly distract from the core business.
He emphasized that a period of stability in European markets could support improved results, stating, "If we can just have a couple of stable quarters in Europe focusing on our customers, we will see an uptick in performance."
In Asia, Carlesund confirmed that cybersecurity issues remain a significant challenge for the company. The region saw a slight increase of 0.8% quarter-on-quarter and 1.6% year-on-year; however, the effects of cyberattacks are still being felt. As he previously reported, "Someone is stealing our products," and he reiterated the company's commitment to long-term protection against these threats, though he acknowledged there is no quick resolution.
Regarding ongoing litigation with Playtech stemming from a 2020 investigation by Black Cube, Carlesund declined to provide further comments, stating simply, "We are in a full lawsuit with them, and that will continue as we go forward. We’re doing everything we can, and now there are new steps taken every day."
