Brazil's Lula Signs Provisional Measure Banning Online Betting

Brazilian President Luiz Inacio Lula da Silva has signed a provisional measure banning the country's regulated online betting market, effective immediately.

The measure, signed on September 25, prohibits the operation, offering, intermediation and advertising of fixed-odds betting, covering sports betting and online games.

Users can no longer make new deposits and have until October 5 to withdraw their balances, with betting websites and apps scheduled to go offline on October 6.

Congress must approve the measure within 120 days for it to remain in force.

The government has presented the measure as a response to gambling addiction, household debt and public-health costs.

The Finance Ministry estimates that Brazilian households spend about R$60 billion (US$11.6 billion) a year on online betting, while the sector generates roughly R$10 billion (US$1.9 billion) in tax revenue.

The Health Ministry says more than 1.3 million people have requested self-exclusion from betting platforms, with 51% saying the request was directly related to health problems.

"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," analysts at Regulus Partners said in a note.

The shutdown reverses a regulatory framework established less than two years ago, with Brazil having begun licensing the nationwide regulated market in January 2025.

The government says 85 authorizations had been granted before the ban, representing R$2.55 billion (US$492 million) in licensing fees.

In its first year, regulated operators paid R$9.95 billion (US$1.9 billion) in taxes and legally mandated allocations, according to an IBJR study based on Finance Ministry data.

The sector generated another R$8.7 billion (US$1.68 billion) in tax revenue and other public allocations from January through July 2026, according to figures cited by the industry.

Regulus Partners estimates the industry is now worth about $5.7 billion in net revenue terms.

Betano, a licensed operator, announced it is 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".

Operator Allwyn, a part-owner of Betano, 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.

Entain reaffirmed its FY26 group underlying EBITDA guidance but expects the measure could mean its forecast is at "the lower end" of its ranges.

Entain said it was disappointed by the sudden development without consultation of industry stakeholders regarding its significant adverse consequences, adding that its operations in Brazil are complying with the measure.

Football clubs face immediate commercial consequences, as betting companies have become major sponsors across Brazil's top division.

IBOPE Repucom found betting companies appeared on the uniforms of all 20 Serie A clubs in 2025, with the combined value of those sponsorships reaching about R$1.1 billion (US$211 million).

The National Association of Games and Lotteries, an industry group, has estimated that more than 30 million users could migrate to illegal platforms after the prohibition.

Regulus Partners forecasts an 85% likelihood of a multi-month blackout, with only a 5% chance of a continued full ban being maintained.

"The scale of industrial damage that such a blackout can do should not be underestimated," the Regulus note said.