Allwyn, a prominent lottery and gaming organization, has announced that its previously set guidance for the 2026 Adjusted EBITDA margin is no longer valid if Brazil maintains its ban on online sports betting and iGaming for the remainder of the year.
The company is currently evaluating how this ban affects its 36.75% stake in Kaizen Gaming, which operates the Betano brand. Allwyn believes the effect on its 2026 Adjusted EBITDA margin will be limited due to Betano's relatively minor contribution to its overall financials. However, if the ban persists throughout 2026, the earlier guidance of an Adjusted EBITDA margin around 37% will be disregarded.
The prohibition, which was implemented on September 25 via Provisional Measure No. 1,394, prohibits fixed-odds betting across Brazil, including both sports and online gaming, as well as the promotion of these services. This regulation took effect immediately upon its announcement.
This legislative change marks a significant reversal for Brazil's regulated betting market, which was set to operate under a new federal regulatory framework starting January 1, 2025.
The Brazilian Ministry of Finance oversees the regulated betting sector through its Secretariat of Prizes and Betting (SPA/MF). Prior to the ban, Kaizen Gaming Brasil was listed as an authorized operator, with Betano functioning under the betano.bet.br domain as per SPA/MF Ordinance No. 246 issued on February 7, 2025.
In response to the ban, Betano is exploring ways to mitigate its impact and is preparing to take legal action to safeguard its rights in Brazil. The company emphasized its five-year license, highlighting the precarious status of previously authorized operators amid the regulatory changes.
Allwyn's exposure to this disruption is different from that of a fully integrated operator in Brazil. Its 36.75% stake in Kaizen Gaming is accounted for using the equity method, meaning the effects will primarily reflect in its share of profits rather than a direct reduction in consolidated revenue.
The group stated that the impact on its 2026 Adjusted EBITDA margin should remain limited, considering Betano's contribution to the overall business. However, it has retracted its previous margin guidance if the ban continues for the rest of the year.
The ultimate financial repercussions will depend on how swiftly Betano can cut costs that are typically fixed in the short term and how effective other strategies will be in compensating for lost revenue. Future financial reports will also be influenced by the length of the ban and any additional revenue and cost measures taken.
While Brazil is Betano's largest single market, it does not constitute the majority of its revenue, according to Allwyn. Other international markets collectively yield more income and have recently shown significantly higher growth rates.
Kaizen is also planning to expand further, aiming to enter four new countries by early 2027.
The Ministry of Finance updated its register on September 24, just a day before the provisional measure, continuing to list companies authorized under Brazil's regulated betting laws.
Allwyn noted that its assessment of the situation is still preliminary and will adapt as the duration of the ban and Kaizen's ability to mitigate its impacts become clearer.