On September 25, Brazilian President Lula da Silva signed a temporary measure, 1.394, in São Paulo, which was published in the official gazette the same day and took effect immediately. This measure functions as law; however, Congress must review it within 120 days, or it will expire. The document was enacted just nine days before the first round of presidential elections on October 4, where Lula is running for re-election.
The key points of the measure include:
- Prohibition and Deadlines: The organization, provision, mediation, and advertising of fixed-odds sports betting and online games are banned, including by offshore operators. Traditional lotteries, including those from the state bank Caixa, are exempt from this measure.
- Licenses will cease to be valid after 30 days without a refund of $5.8 million paid for each license, and no compensations will be provided. The issuance of new licenses is halted.
- Operators stopped accepting deposits immediately following the publication, and their websites and apps must become inaccessible to users in Brazil by October 6. They have 10 days to remove advertisements and sponsorship logos, including those on club jerseys.
Refunds to Players:
- Players can withdraw remaining balances from their gaming accounts until 11:59 PM on October 5.
- From October 7-8, operators must provide banks with lists of clients by CPF along with refund amounts.
- From October 9-14, banks are required to return funds, with unclaimed amounts transferred to Caixa's account.
- A $38,600 daily fine will be imposed on operators for failing to meet refund obligations.
Enforcement:
- Banks and payment systems, including Pix, are prohibited from processing transactions in favor of operators. App stores and operating system providers must block their applications.
- Social networks and other internet services face fines of up to 10% of revenue in the country, but no more than $9.7 million, for advertising betting and online casinos.
- A separate bill proposes criminal liability for organizing betting and online casinos (4-6 years imprisonment), as well as for promoting, processing payments, and using personal data for advertising purposes (2-4 years).
Industry and Market Impact:
- The ANJL association is preparing a lawsuit for the return of licensing fees and damages, estimating taxes from the sector at $1.9 billion for H1 2026, with over 30 million players moving to the illegal segment.
- The IBJR institute called the ban a rupture of the regulatory framework and assessed the budget risk at $11.2-14.1 billion.
- Companies like Sportingbet (Entain), Betano (Kaizen Gaming), Betnacional (Flutter), and Superbet stated in a joint statement that the illegal segment already accounts for 41% of betting turnover.
- Public companies like Evolution (9% revenue), Allwyn (stake in Betano), Entain, and Flutter are the most dependent on the Brazilian market, according to JPMorgan.
Advertising and Football:
- Betano, Novibet, Superbet, and Esportes da Sorte terminated advertising contracts with TV channels on the day the measure was published, according to Folha de S.Paulo; Globo, ESPN, and Band ceased to run ads for operators.
- Licensed operators are expected to spend $4.6 billion on advertising from January 2024 to August 2026, according to Ibope and Tunad.
- 13 out of 20 Serie A clubs have operators as title sponsors, with Betano owning the naming rights for the championship and the Copa do Brasil.
- Flamengo FC (Betano, $51.9 million for the season) stated that the rapid regulatory change undermines legal certainty for any investor; the club president estimated the losses from the ban at $83.1 million, and the total loss for Brazilian football at $483 million.
The response from operators has varied based on their commitments. While advertising contracts with TV channels were terminated on the day of the measure's publication, none of the operators surveyed by Meio & Mensagem announced the termination of sponsorship agreements with clubs, with only Sportingbet confirming ongoing negotiations.