Stake's legal team is set to take action after a Brazilian court nullified an injunction that had temporarily shielded the operator from a betting ban.
President Luiz Inácio Lula da Silva's decision to prohibit licensed betting in late September initially granted Stake a temporary reprieve through a preliminary injunction allowing it to continue operations until October 25. However, the next day, Judge Luis Antonio Johonsom di Salvo, who heads the Federal Regional Court of the 3rd Region (TRF-3), suspended that injunction, reinstating the ban on Stake.
Representing Stake is the law firm Bichara e Motta Advogados, with partner Udo Seckelmann confirming the company’s intention to challenge this recent ruling. "Of course, this is not over," Seckelmann stated. "This is just one setback that happened. We are drawing up some strategies to overturn this. We’re going to challenge this decision for sure. We have two possible strategies. We’re analysing which one would be best to file."
Though Seckelmann did not disclose the specific grounds for Stake's challenge, he emphasized the case's significance for Brazil’s betting industry, which is currently struggling to regain its legal footing. "If we get a positive decision in the next couple of days, maybe other operators will get that too," he noted, highlighting the potential impact on the broader industry.
Stake's principal arguments revolve around the substantial investments required to enter the Brazilian licensed betting market, which include a BRL30 million (approximately $6 million) licensing fee and a financial reserve of at least BRL5 million. According to Seckelmann, this abrupt reversal undermines the legal assurance that existing operators relied upon when they entered the market.
“The government, you regulated the market, you established all the rules, you established that based on these rules we’re going to pay you BRL30 million plus BRL5 million of financial reserve to exploit this activity that is legal and regulated,” he remarked. “And from one moment to another, before we reach the two-year landmark of this licence that would be valid for five years, you say now it’s over, that activity is prohibited.”
The launch of the regulated market on January 1, 2025, has been marred by public perception issues linking gambling to family debt. Seckelmann pointed out that much of the negative public sentiment conflates licensed operators with illegal gambling entities. He argues that the government's ban lacks support from valid studies indicating that licensed operators contribute to addiction and gambling-related debt. "The reasoning that was raised by the federal government… was not grounded on any relevant studies and statistics that showed that the regulated market in Brazil was causing all these problems," he asserted. "To the contrary, actually."
In questioning whether the judge's decision to overturn the injunction was politically motivated, Seckelmann noted that the Attorney General's Office (AGU) requested the appeal, claiming the initial ruling favored Stake unfairly against other operators. However, he suggested that the AGU specifically targeted the president of the TRF-3, who traditionally aligns more with the government's interests, indicating possible strategic behavior in the appeal.
A partial survey by the National Association of Games and Lotteries has revealed that over 3,500 individuals have already been laid off within Brazil's betting sector since the provisional ban was enforced. Seckelmann stressed the urgent need for the licensed sector's return, even if only partially, as Stake's case progresses alongside a broader effort from two of Brazil’s key gambling trade bodies. These entities have taken their fight to the Supreme Federal Court (STF), arguing that the ban is unconstitutional.
As the resolution of this constitutional challenge seems likely to extend until after the second round of elections on October 25, Seckelmann expressed concerns about the ongoing damage to stakeholder operations. "We waited for the Supreme Court to make a decision, [but] they were not making any decisions," he explained. "So we [Stake] said, ‘Okay, they are not making any decisions. Our operation is frozen. We have to terminate several contracts. We have to fire a lot of people. We're losing money here'." He warned, "If you take a lot of time to decide this, our operation will be over. We have a lot of losses, and this will be irreversible. We’ll not be able to reverse everything that’s happening."
