Brazil's President kills regulated market overnight as he looks at reelection bid

• President Luiz Inácio Lula da Silva, Brazil's President, looking at a reelection bid, has effectively killed regulated gambling overnight
• The incumbent has turned his saber-rattling into actual hostility towards the sector, dealing the regulated sector a potentially devastating blow
• The biggest winner is the unregulated and offshore markets, even though President Lula's measure may not hold past a 120-day Congressional vote deadline

President Luiz Inácio Lula da Silva, Brazil’s President and a career politician with a populist streak, has just executed a U-turn on the country’s online gambling landscape by backtracking on the regulated gambling framework and effectively ending online sports wagering.

President Lula’s government was the one that originally enforced the regulated gambling framework back in December 2023, which led to a local explosion in regulated gaming entities. However, President Lula himself, through his government, remained ambiguous about whether he fully endorsed regulated gambling locally.

Regulated gambling in Brazil is now gone - all courtesy of the man who brought it in the first place

In fact, he repeatedly said that he could overturn the regulated status at any point, should the sector fail to protect consumers, which was ill-defined to begin with. In the run-up to a new Presidential election due on October 4, President Lula has gone ahead and countered his main rival in the race, Senator Flávio Bolsonaro, son of the jailed former President Jair Bolsonaro.

Bolsonaro has repeatedly argued that he would himself end online gambling if he wins, but President Lula has bitten the bullet and acted while still in office. President Lula’s decision, signed on Friday, September 25, immediately blocks previously licensed operators from offering, advertising, or running their business in Brazil. The decision impacts both sports betting and online casinos.

This leaves international companies such as bet365, Entain, and Betano on the hook after investing millions in the country to set up operations and secure the necessary licenses. With the signing of the new measure, these companies and competitors now have a few weeks to wind down, while federal licenses will become unavailable in 30 days following the measure’s announcement.

In the interim, no new customers may be accepted by these platforms. The law does not provide any compensation for the fact that the licensees will not run their full course, making it one of the most damaging political decisions for the gambling industry. Betting websites and apps must shut down by October 6, whereas any customer balances must be cleared and returned from October 9 through October 14.

The regulated sector in disarray and with no recourse as the measure takes effect

Gambling advertising is also going down with immediate effect and must be wound down over the 10 days following the announcement on Friday, September 25. There is a silver lining, however, as this is a provisional measure that could be overturned if it fails to garner the approval from Congress required by law.

Congress would have 120 days to deliberate whether lawmakers want to make the decision permanent. Regardless, the immediate fallout of the decision will be felt in the sector, which has already invested hundreds of millions to get operational setup.

Consumers will be similarly left in a pickle, failing to understand what has prompted the shutdown, and most likely taking their anger at brands first, meaning that a potential return later on would be even more challenging for companies - if they agree to once again invest in what is shaping up to be an uncertain business environment.

The decision by President Lula is also in stark contrast with a previous announcement by the Secretariat of Prizes and Betting just a week ago, in which the regulator announced further measures meant to strengthen the regulated market and push back against the black market, which is the biggest winner from the abrupt shutdown of the regulated market.

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