Martin Carlesund, CEO of Evolution, expressed profound concern regarding Brazil's recent ban on licensed betting, labeling the decision a "total negative" for the gaming industry. As developments unfold, the gaming supplier is left waiting for clarity on the situation.
In late September, Brazilian President Luiz Inácio Lula da Silva announced a blanket ban on gambling just under two years after the regulated online market was introduced. This abrupt decision has led Evolution to temporarily shut down its studio in São Paulo, which began operations last year.
During the company’s post-third-quarter earnings call, Carlesund articulated the shock surrounding the ban, emphasizing the unsettling nature of the timing so soon after launching a regulated framework. "I think that everyone is flabbergasted about the situation in Brazil," he remarked, noting the detrimental effects this action has on the business. He added, "It’s highly unfortunate that a populist agenda can overthrow a regulatory framework that has only been in place for a year and a half."
The Brazilian betting landscape is now anticipating a ruling from the Supreme Federal Court that will determine whether Lula’s ban is constitutional. Carlesund affirmed that the studio could reopen promptly if the ruling favors the licensed market, stating Evolution is "ready to accelerate" its operations back in Brazil.
When asked if Evolution's revenue from Brazil would plummet to zero should the ban remain, Carlesund indicated that the country is not entirely isolated from the broader market dynamics, adding, "We have to monitor the situation in Brazil. No one really knows what will happen. It could be reopened again."
Despite the ongoing uncertainty, Evolution has maintained its margin guidance for the full year. Carlesund reassured an analyst questioning the company’s ability to meet profitability targets without Brazilian revenue in the fourth quarter that their outlook remains stable. The firm reported a significant year-on-year increase of 23.1% in its Latin American operations during the third quarter, a statistic untainted by the recent ban, which took effect in early October.
In terms of financial performance, Evolution's Q3 net revenue reached €526.1 million ($585.2 million), reflecting a year-on-year growth of 3.7%. Adjusted EBITDA also saw an increase of 2.7%, totaling €345.9 million. This quarter represents the first period since 2024 in which all regions of Evolution reported growth compared to the previous quarter.
However, while Latin America, Africa, and North America exhibited notable growth—from 23.1% to 13.6%—Europe lagged behind, with only a 0.4% increase quarter-on-quarter and a decline of 4.7% year-on-year. Carlesund remarked on the European market's lackluster performance, declaring it "not exciting" and asserting that the company “should do better” there. He pointed to regulatory changes and evolving tax structures as distractions inhibiting performance in Europe.
In Asia, Evolution continues to grapple with security threats as cyberattacks impact its distribution networks. Carlesund confirmed that problems related to cybercriminals have persisted, with only minor quarterly improvements in revenue. "There is no quick solution to these cybercrime issues we continue to see," he stated. Nevertheless, he expressed satisfaction with the technical measures being implemented to secure the company’s products, although he acknowledged that volatility might be expected as they advance their long-term strategy.
Addressing a protracted legal dispute with Playtech, which arose after Playtech hired Black Cube to investigate Evolution's activities, Carlesund stated that the lawsuit is ongoing and that Evolution is utilizing all available resources to address the allegations raised against them. "We are doing everything we can, and now there’s new steps taken every day," he said.
