Will Brazil’s election decide the fate of regulated betting?

With Brazil’s presidential election heading to a second round, what exactly it could mean for the licensed betting sector remains unclear.

The battle for Brazil’s presidency could have huge ramifications for its licensed online gambling sector, which was banned in late September by the incumbent leader Luiz Inácio Lula da Silva through a provisional measure.

Despite it being less than two years since the regulated market went live, public perception and political criticism led to Lula introducing an immediate ban, which will go to the National Congress for a decision on whether to make it permanent.

However, Lula did not come out with the best result from the first round of the election.

That honour fell to the Liberal Party leader Flávio Bolsonaro, son of imprisoned former president Jair, who received 47.03% of the vote, compared with Lula’s 45.16%.

Neither Bolsonaro nor Lula crested 50% of the vote, a mark that is necessary to avoid the second-round runoff, which will now take place on 25 October.

Ramiro Atucha, CEO and founder of Atucha Strategic Advisory, is concerned the election going to a runoff could have a detrimental impact on the betting sector’s attempts to reverse Lula’s ban.

Those efforts are already in motion. In the days following Lula’s announcement, Brazil’s two main gambling trade bodies called on the Supreme Federal Court to overturn the ban.

“Public opinion on betting is strongly negative right now, and the evangelical vote carries a lot of weight for both candidates,” Atucha tells iGB. “In that context I can only imagine both of them doubling down against the regulated industry, and against online casino in particular, between now and the runoff.

“Nobody wins votes defending bets in Brazil this month.”

Congress the key battleground

Perhaps the biggest victory for the betting sector over the weekend was Bolsonaro’s Liberal Party’s victory of 121 of the 513 seats in the Chamber of Deputies.

This means the Liberal Party will have the largest bloc in the Chamber of Deputies since 1990.

Atucha argues the stronger congressional showing by Bolsonaro’s party could make it harder for Lula’s government to sustain the ban on betting, particularly because lawmakers may take a longer-term view of the legal and economic consequences.

“The people most exposed to that short-term, evangelical-driven pressure are the two presidential candidates,” he says. “Congress works on a longer horizon.

“A chamber where the PL has the largest bench since 1990, even if 121 seats is still well short of the 257 needed for a majority on its own, is a chamber with more respect for signed agreements and more awareness of what the lawsuits mean.”

Udo Seckelmann, partner at Brazilian law firm Bichara e Motta Advogados, warns however that a strong opposition to the ban would not necessarily translate into a congressional rejection of the measure.

“The first-round result will likely shape the political environment around the debate, but the key point is that the ban is still subject to congressional review and judicial scrutiny,” he explains. “If opposition forces gain political momentum, Congress may become more inclined to amend or reject the provisional measure.

“However, the debate is no longer purely partisan. The discussion increasingly revolves around whether prohibition is more effective than regulation in protecting consumers and combating illegal operators.”

Is a Bolsonaro win a positive for betting?

Although a Bolsonaro win in the election may appear to be the more beneficial outcome for Brazil’s gambling sector, it also would not automatically mean a return to the pre-ban scenario.

In response to Lula’s ban, Bolsonaro described the move as “populist, hypocritical and politically motivated”.

Yet, Bolsonaro has himself previously vowed to ban online casino, maintaining only sports betting.

“He [Bolsonaro] relies on the evangelical vote as much as Lula does, and that electorate is openly against gambling,” Atucha suggests. “[But] of the two, he is the one I see as more sensitive to pre-existing agreements.

“I have no hope of things returning to normal under Lula. If Lula wins, I only see further radicalisation in the populist direction, and the decision against the operators and the sector gets harder, not softer.

“I have some hope under Bolsonaro. But at this stage of the election, with the pressure the evangelical church and public opinion are putting on both of them, I would not bet on either outcome.”

Seckelmann is cautious about drawing a direct line between a Bolsonaro victory and the regulated market returning, arguing that any incoming government would face competing pressures.

“It is difficult to predict the policies of a future administration,” he comments. “What can be said is that any new government would have to weigh consumer protection concerns against legal certainty, economic investment, tax collection and the practical challenge of preventing migration to offshore operators.

“The ultimate direction would depend on the policies adopted by that administration and on congressional support.”

Has investor confidence been irreparably damaged?

The election result could have lasting consequences for the gambling sector in Brazil.

But even if the regulated market is to return, there will be questions over the market’s stability and, ultimately, investor confidence in its future.

“I am not sure the question is whether operators want to return,” Atucha suggests. “They paid BRL30 million per licence, they built local structures, they are laying off a lot of people right now.

“For them this is about getting it fixed as fast as possible and having a chance to recover what they invested.

“The harder thing to rebuild is the trust of international investors in Brazil’s respect for institutions, for agreements and for licences it granted itself. That takes years, and it goes well beyond gaming.”

Seckelmann similarly warns the disruption could have implications beyond the current operators, with abrupt changes to the regulatory framework potentially making future investors more cautious about committing to Brazil.

“Operators can adapt to regulatory changes, but sudden policy reversals increase perceived regulatory risk and may affect future investment decisions,” he says.

“Many companies would closely evaluate whether the legal framework offers long-term stability before making new commitments.”

Electioneering move with lasting damage

Bolsonaro’s claim that Lula’s ban was an electoral tactic is one the industry largely agrees with.

Atucha feels it was a short-sighted move and one that could have consequences that continue years down the line.

The ban is especially controversial when it was, in fact, Lula’s government that finally brought regulated gambling to Brazil.

“Given the timing and the polling on betting, I think it was 100% an electoral decision,” Atucha says. “It is so short term that it ignores the tax collection already budgeted for the coming months, the lawsuits, the people losing their jobs, the club sponsorships. It is a purely populist measure built for the election cycle.

“Let’s remember who regulated this market. The same government that launched the licensed market in January 2025. Less than two years later, it bans the sector it created. There is no coherent policy that explains that but the electoral calendar.”

This could, Atucha suggests, make a return to regulated gambling easier under Bolsonaro than under Lula. Because it was Lula’s government that introduced and regulated the market in the first place, Bolsonaro could restore it without having to reverse policy decisions made by his own administration.

“There is one thing that may play in the industry’s favour,” Atucha adds. “It was not his [Bolsonaro’s] government that approved and regulated this market. He can let it come back without owning the original decision.”

However, Atucha warns that the damage may already be irreversible for some operators, regardless of who wins the presidency.

“For the operators that were doing well before the ban, a quick restoration is still an opportunity,” he concludes.

“The smaller ones that were already struggling are a different story. Many of them are going to hit a point of no return during these months, and no government is going to be able to undo that.”