The Brazilian President has banned all forms of gambling in the country… sparking further chaos at a host of British betting operators.
Luiz Inacio Lula da Silva, or ‘Lula’ as he prefers to be known, has signed off on an order – ‘Brazil Without Bets’ – that prohibits sports betting and online casino gaming in Brazil… just days before he stands for a fourth term as president.
And it’s a move that has proved disastrous for Flutter and Entain, with the former predicting losses of £52 million due to the ban and the latter losing some 7% of their stock market value since the decision was announced.
Lula Makes His Move
Online gambling was legalised in Brazil for the first time in 2018 by the former president, Michel Temer.
He lost an election that same year to Jair Bolsonaro, who left the burgeoning betting industry in the country to grow almost without regulation.
Lula, since taking up office in 2023, has made no secret of his opposition to gambling and has sought to implement a partial or full veto throughout his time as leader.
But the timing of the ban, which was introduced barely a week prior to the latest General Election in Brazil, has led some to accuse Lula of electioneering – not least Flavio Bolsonaro, the son of Jair who is standing against the current president in the poll.
The current polling suggests that the election is likely to be very closely fought, with Lula – now aged 80 – hoping that the betting ban will swing the public in his favour.
Brazilian Football Impacted?
New deposits have been barred, while punters have been told that they have until October 5 to withdraw their funds before accounts are closed down. Lula has also signed a separate order making it illegal to offer betting facilities in Brazil.
But the ban is, in effect, temporary – the new legislation must receive congressional approval for it to be enacted, which is not a guarantee. Besides which, Bolsonaro will almost certainly overturn the prohibition should he win the election.
There could be unwitting consequences for Brazil’s favourite pastime: football. Brazilian clubs lean heavily on gambling operators for sponsorship and commercial revenue, with one team – Gremio – warning that the ban will ‘not only be an open door for illegal betting, but a fatal blow to Brazilian football, leading many clubs to insolvency.’
One of the most iconic clubs in the country, Flamengo, ran their own in-house betting site. They have warned of having no Plan B to prop up their finances, while Fluminense president Mattheus Montenegro spoke of his ‘serious concerns about the club’s future.’
Share Price Implosion
Brazilian football isn’t the only ‘sector’ counting the cost of the ban.
Both Flutter (Betfair, Paddy Power etc) and Entain (Coral, Ladbrokes) have a significant presence in the country, with the latter yielding around 5% of their global online revenues in Brazil. So, clearly, they are set to lose out considerably if this temporary prohibition passes the congressional vote.
Flutter could miss out on more than £50 million in revenue if the ban is made permanent; they have already stopped taking bets in Brazil and their share price has fallen a staggering 11.7% in the past five days.
Flutter have confirmed that they may appeal the decision, although it’s not known to whom they would be appealing.
Entain’s share price, which has been buffeted countless of times of late due to regulatory headwinds and tax hikes, fell another 7% in the aftermath of Lula’s decree. That means that the firm is now trading at the same stock market value as in the middle of the health crisis.
They have been forced to downgrade their revenue estimates for the trading period, with online net gaming revenues revised to 4-6% and underlying earnings expected to come in at the lower end of projections – £910 million, rather than the £960 million proposed earlier this year.
Putting it mildly, an Entain spokesperson revealed that the developments in Brazil were ‘disappointing’.
It caps a miserable year or so for the two firms, who were amongst the hardest hit by the UK government’s decision to almost double the tax paid on online casino games to 40% – in the aftermath, the pair have cut jobs and closed dozens of their betting shops.
While the regulated sector loses out, the black market could be set to gain. Illegal operators that target Brazilian punters are already taking a staggering £3.6 billion in bets a year already… that will surely now increase exponentially.