Brazil bans betting: The immediate aftermath

Brazil’s President Lula has wielded the proverbial guillotine on the country’s still young legal online betting sector.

On Friday, ahead of the country’s general election on Sunday, he issued a provisional measure banning the operation of online betting sites in Brazil, effective immediately.

Starting 6 October, all licensed sites will be blocked, with bettors having to request the withdrawal of their funds by the day before. If they fail to do so, the sites are required to credit the amounts they hold to the registered accounts between 9 and 14 October.

Although the measure is provisional, it must still pass through Congress, to be ratified or amended by within 120 days.

Understandably, the almost two-year-old licensed betting sector in the country is reeling from the abrupt announcement. As Regulus Partners noted in response to the Friday announcement, “an industry now worth about $5.7 billion in net revenue terms ($6.3 billion run-rate GGR Q1/26) is facing an immediate and total shut-down”.

“What licensees are supposed to do with their Brazil-facing staff and long-term contract liabilities has not been made clear and the president does not seem to care,” the note continued.

Taking legal action

One hope for the sector is the possibility of legal action against the decision. Betano, a licensed regulator which boasts Brazil as its largest market, is already evaluating “potential mitigants to the impact of the provisional measure” and is “preparing legal action to protect its rights in Brazil in consideration of its five-year licence to operate”, it announced on Monday, via an update from part-owner Allwyn.

Regulus also highlights the possibility of a court overturning the decision, as it threatens federal tax revenue. “Suddenly banning a product which is specifically and directly taxed clearly does threaten federal tax revenue and no legally required justification or mitigation has been made public,” the analyst note continued.

Between January to August, BRL2.11 trillion ($411.2 million) in gambling taxes were submitted to the Brazil Federal Revenue Service, the department reported last week. The figure marked a 12% increase over the same period of 2025. 

Industry projections had indicated that the sector could reach a record revenue of BRL16 billion by the end of 2026. As Regulus points out, a portion of the proceeds support education, health and sport in the country and it believes this provides a strong argument for the provision to be considered unconstitutional.

A long and troubled road

Unfortunately, that will not be quite enough to allay the sector’s concerns, as many will know that Brazil is certainly not known for its swift and concise legal proceedings. The sector has been riddled with law suits in the years since its December 2024 approval (notably, by President Lula).

In 2025 a case at the Supreme Court was brought by a labour union with significant lobbying power. It sought to stamp out the sector altogether by finding it “unconstitutional” for various reasons. Various political and industry figures appeared in court, but the case went eerily quiet and seemed to meet no resolution.

Another case was brought against municipal lotteries in Brazil being able to provide digital sports betting. Brought by the Solidarity Party, the case hit the country’s Federal Court warning that municipal lotteries would throw the financial stability of the newly regulated Brazil betting market into doubt.

Elsewhere the sector has been riddled with political pushback during its two short years of existence. Senators have filed numerous bills either seeking to ban betting or heavily regulate its advertising processes as a strong public sentiment against gambling and the risk of gambling addiction swept the nation.

But up until last week it was all largely noise. Lula’s anti-gambling position is very much tied to his potential re-election next week, and his threats to end the legal sector have been rife for a few weeks now.

What happens next?

Regulus estimates a continued full ban of legal betting in Brail is unlikely, with only a 5% chance of being maintained. Instead the analysts have forecast a multi-month blackout to have an 85% likelihood.

“The scale of industrial damage that such a blackout can do should not be underestimated. There is also a clear danger that a Lula victory followed by a PM defeat will lead to tighter gambling regulations of the performative sort that drive the black market rather than protect players,” the Regulus note said.

Operators like Allwyn and Entain have already released forecasts for the impact the provisional ban could have on their Brazil businesses.

Although Allwyn maintains only a 36.75% shareholding in Kaizen Gaming – the operator of the Betano brand – it has said its previously communicated guidance of an approximately 37% adjusted EBITDA margin in 2026 would no longer be applicable if the provisional measure remains in place.

“The exact impact would be dependent on, among other factors, the timing and effectiveness of measures to reduce certain costs that are not typically variable in the short term,” the operator said in its statement.

Betano to continue its expansion plans

It added that Betano would “continue to progress its pre-existing plans to enter new markets, targeting entry into four additional countries in early 2027”.

Meanwhile Entain this morning reaffirmed its FY26 group underlying EBITDA guidance of between £910 million to £960 million and online underlying EBITDA margin guidance of 21% to 22%.

However, it expects the measure could mean its forecast is at “the lower end of both ranges”.

It also noted that, while it was “disappointed by this sudden development without consultation of industry stakeholders regarding its significant adverse consequences, Entain’s operations in Brazil are complying with the provisional measure”.

Taking to LinkedIn over the weekend to mourn the loss of the market (as many industry folk did), Kambi CEO Werner Bercher also expressed his disappointment over the decision.

Bercher said Brazil only represented “a low single-digit percentage of Kambi’s revenue” and, as a result, he expected the financial impact on the group to be limited.

Winners and losers

Prominant operators and suppliers across the global sector put a lot of weight on the Brazil opportunity when it opened up to licensed online betting. Undoubtedly, the measure will hit various players hard.

Some, like Playtech, were counting on the market to provide significant gains, particularly as the supplier had received the tender to supply its tech to the Brazilian state-owned bank Caixa’s betting operations. CEO Mor Weizer told analysts a couple of weeks ago he expected the product to launch in 2027.

However, others have remained prudent and cited continued regulatory strains as reason enough to not go all-in on Brazil.

Entain CFO Michael Snape noted in that company’s H1 earnings report that Brazil was “incredibly difficult and unpredictable”.

He said Entain was deliberately avoiding a spending race in Brazil, stating: “In Brazil, I’d say we very much hope that we’ll see some recovery in the second half.

“We think the team are doing the right thing. We are very focused on maintaining the proper contribution that Brazil gives us, as opposed to just trying to drive for a top line, but we want to build a sustainable business there,” he said at the time.