Stake to challenge reversal of injunction against Brazil betting ban
Stake’s lawyers will pursue further legal action after a Brazilian court overturned an injunction temporarily protecting the operator from a betting ban.
After Brazil President Luiz Inácio Lula da Silva banned licensed betting in late September, it appeared Stake had a reprieve after a preliminary injunction granted it the right to continue operations until 25 October.
However, the next day Judge Luis Antonio Johonsom di Salvo, president of the Federal Regional Court of the 3rd Region (TRF-3), suspended the injunction, with Stake once again banned.
Stake’s case is being handled by the Brazilian law firm Bichara e Motta Advogados.
Udo Seckelmann, a partner at the firm, confirms to iGB that Stake will challenge the decision overturning its injunction.
“Of course, this is not over,” Seckelmann says. “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.”
While he won’t reveal on what grounds Stake plans to challenge the suspension, Seckelmann acknowledges the importance of the case for the wider Brazil sector as it attempts to wrestle back its legal status.
“If we get a positive decision in the next couple of days, maybe other operators will get that too,” he adds. “So we know the degree of responsibility that we have for the whole industry.”
What are Stake’s main arguments?
Much of the sector’s furore in response to the ban centred on the investment companies have made to meet the high barriers of entry to the Brazilian licensed betting market.
These included a BRL30 million ($6 million) licence fee and a financial reserve of at least BRL5 million, while international companies such as Stake were required to have a headquarters in Brazil.
This forms a key pillar of Stake’s argument, with this reversal undermining the legal certainty on which operators relied when entering the Brazilian 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,” Seckelmann says. “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.”
Negative public perception of betting in Brazil
Since the regulated market launched on 1 January 2025, the sector has been plagued by public perception issues after significant news coverage that linked gambling to family debt.
But as Seckelmann points out, this often conflated licensed operators with black market companies.
In his view, the ban wasn’t backed by evidence that demonstrated it was licensed operators behind Brazil’s much-publicised issues with addiction and gambling-related debt.
“The reasoning that was raised by the federal government to issue the provisional measure, it was not grounded on any relevant studies and statistics and aspects that showed that the regulated market in Brazil was causing all these problems,” Seckelmann declares.
“To the contrary, actually. If you analyse what they are saying in terms of addiction, in terms of debt that it was causing to the Brazilians and illegal gambling happening, you see that the regulated market was not the villain here in this scenario. It was actually illegal gambling, which was growing a lot in Brazil.”
Was the overturning of Stake’s injunction politically motivated?
The judge’s decision to overturn Stake’s injunction came at the request of the Attorney General’s Office (AGU), arguing the initial ruling gave Stake an unfair competitive advantage over other operators.
But Seckelmann suggests that the AGU was strategic in specifically targeting the president of the TRF-3, as he tends to be more sympathetic to the government.
“The AGU, they appealed this decision to the president of the federal tribunal, who is a guy that is pro-state, pro-federal government in his politics, in his decisions,” Seckelmann explained. “So basically, the prosecutors, they knew that if they brought this for this president to decide, he would decide in favour of them.
“If you analyse this decision, actually he doesn’t raise any arguments. He just raises general principles and that the provisional measure established this, and then they took this decision. So it’s a political decision.”
Ban could cause irreversible damage
A partial survey by the National Association of Games and Lotteries found that over 3,500 workers have already been laid off by Brazil’s betting sector since Lula issued the provisional measure.
As the days since the ban came into effect continue to tick over, Seckelmann says the licensed sector’s return, even if partial, is imperative.
While Stake’s case is ongoing, there’s also a broader challenge with the Supreme Federal Court (STF) after two of Brazil’s main gambling trade bodies filed a motion to get the ban overturned on the basis that it’s unconstitutional.
As Seckelmann explains, the wait for that constitutionality challenge to be resolved only looks likely to be concluded after the second round of the elections, which is scheduled to take place on 25 October.
This was central to Stake’s argument that a preliminary injunction was necessary to preserve the company’s position while the STF considers the dispute.
“We waited for the Supreme Court to make a decision, [but] they were not making any decisions,” Seckelmann says. “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’.
“So the judge has to understand that 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.”