Key Points
- Brazil’s Attorney General told the Supreme Court that operators knew exactly what they were getting themselves into when they forked out R30m per licence.
- A São Paulo federal judge has given Stake a reprieve, letting them operate until 25 October, and that’s a first for any operator.
- The Treasury and the industry are still at odds over how much cash is at risk, and that’s because they’re basically looking at different things.
Brazil Betting Ban: AGU Says No Refund For R30m Licence Fees
Eighty-five licences were sold to operators for R30m each, and now the government is telling them “No way are you getting any of it back”.
Brazil’s Attorney General’s Office (AGU) has asked the Supreme Federal Court (STF) to block every request to put a hold on the country’s betting ban. The 60-page submission was signed by Attorney General Jorge Messias on 5 October, and it ended up on Justice Luiz Fux’s desk just hours before the licensed betting sites were supposed to shut down.
Why Does The Government Say No Refunds?
The AGU’s top argument in this full court document is a pretty simple one: if the government has the right to create a lottery, it also has the right to shut it down. When it comes to money, the AGU argues that the R30m fee is effectively the price of doing business, a one-off cost that comes with the territory. According to the AGU, it’s not an advance payment that’s eligible for a refund.
The five-year term of the licence doesn’t change that view, the AGU claims. It simply set out how long the permit was good for, not a guarantee that the law would remain in place. The AGU also points to a specific clause in a government ordinance that specifically rules out operators getting any kind of compensation when a licence gets cancelled. As the AGU puts it, “the regulatory risk was always going to be on the operators”.
The Licence Fees A Big Number
The bickering between operators and the government is all about how to read this situation. Across 85 licences, the fees paid out total a whopping R2.55 billion, and that doesn’t even take into account the money operators spent on staff, investments, and sponsorship deals. Whether any of that cash will ever see the light of day again is going to be a question for the courts to decide.
Two Tax Numbers, Two Different Stories
The Treasury is thinking one thing when it comes to lost tax revenue. They reckon that the country is going to take a R1.54 billion hit in 2026, R5.15 billion in 2027, and R5.33 billion in 2028. But the industry has a very different take on things. They reckon that up to R73 billion in tax is now at risk, between 2027 and 2030. That’s a pretty big difference, and it raises some interesting questions about what’s really going on here. According to LCA’s scenario for IBJR, between 2027 and 2030, up to R73 billion in tax is at risk.
Admissions Made In The Filing Concerning The Black Market
There are also some concessions buried deep in the filing that operators will be happy to use against the AGU when arguing their case in front of the court. First, the AGU admits that the anti-money-laundering requirements applied only to the licensed companies, called “those who are not the vector of the wrongdoing”. As the filing’s own admissions show, the AGU is also claiming an illegal market share of 41% to 51%. Finally, the filing admits that rebuilding the market with illegal suppliers costs much less than getting rid of the illegal ones.
Between 25 September and 1 October, there were 10,435 illegal sites referred for blocking. Meanwhile, ANJL’s LegitBet tracking service counted, and as of 7 October, there were 30,282 active links to illegal betting sites. According to ANJL’s president Plínio Lemos Jorge, the ban has shifted the players “from more than 180 legalised sites to more than 30,000 clandestine ones.”
An Additional R$1bn Case Against 17 Operators
While rejecting any refunds, the AGU also sued 17 operators, including Betano, bet365, and Betfair. According to Folha de S.Paulo, the case involves a claim for at least R1bn of collective moral damage and the cost of public health measures. The preliminary cost estimates by Health Ministry studies come up to R2.6bn.
The claim has already been stopped in Pernambuco. The federal court gave the AGU 30 days to explain “objectively” how each of the companies caused those losses, according to the court report by Yogonet. Furthermore, the judge asked the government to correct references to “diseases attributable to cigarettes”, which apparently comes from the wording of the 2019 tobacco lawsuit.
Sporting Clubs, Olympic Sports, And Listed Operators
Football clubs had been affected first. 14 out of 20 Brasileirão clubs featured a gambling brand as the main sponsor, and it accounted for 34% of their commercial income in 2025, according to AFP. Only the Betano deal of Flamengo generated $46m annually.
Olympic sports face a tougher squeeze. According to the Brazilian Olympic Committee, its market can suffer losses up to R$2.623bn by the end of 2027, iGaming Brazil reports. For listed companies, the closure of operations for the rest of the year, as reported by Flutter, can result in $70m of lost revenues and $20m of reduced EBITDA.
Stake Becomes The First Operator To Win In The Courts
The shutdown finally started to crack on 8 October. A federal judge in São Paulo, Cristiane Farias Rodrigues dos Santos, at the 9th Federal Civil Court, ruled that Stake could keep on operating for now until 25 October at the latest, or until another ruling comes in. Stake’s temporary win came with 12 conditions attached, including one that said they couldn’t run any new promotions. The judge also declined to put the shutdown on hold or let Stake go back to doing business until 2029.
Up at the Supreme Court, Fux has still not made his decision. And to add to the delay, the Attorney General’s office has asked him to listen to someone else’s point of view first, that of Prosecutor-General Paulo Gonet, and to consider holding another public hearing. If you follow what’s happening in the Brazilian press, it looks like Fux may not have to make a decision until after the presidential runoff.
The Dates That Are Going To Make Or Break The Market
Under the rules imposed by the measure, every licence is due to run out by 25 October, the same day as the presidential runoff in Brazil. Flávio Bolsonaro won the first round with 47.03% of the vote compared to Lula’s 45.16%, at least according to the ballot result from the first round. Bolsonaro said that if he gets into power, he’ll keep sports betting but online casinos will be banned.
It looks though like voters are going to back the ban, a poll that was taken by the eCidadania in the Senate on 5 October showed that 85.6% of the 561,930 voters surveyed backed the ban, according to the figures put out by European Gaming. But that poll doesn’t actually count for anything in the Senate, and Congress has 120 days to vote on the measure, which is a long time. And to make matters worse, the clock stops ticking during the recess, which means it could be 2027 before the matter is finally settled, that is, if the measure is allowed to pass.
Expert Analysis: Brazil May Well Win The Legal Battle And Still Lose The Public Trust
We reckon the Attorney General’s office has got a pretty good case on the legal side of things, probably even stronger than the industry lets on. Courts are rarely as generous when it comes to allowing permits as the industry would like them to be.
But the thing is, the same filing from the AGU contains two completely opposing views, it argues that the state has the right to change a perfectly valid policy, but then spends ages saying that the previous framework was actually constitutionally dodgy. The AGU are saying that these two views don’t actually contradict each other, but in our opinion, that’s exactly the sort of tension that a judge will be asked to sort out.
As for the money, well the optics aren’t exactly great. Brazil’s R$2.55bn in licence fees while asking for R1bn more from the same companies, and that’s not to mention the lawsuit that’s currently underway. We think that these two things will be seen together by investors, and it doesn’t look great.
The list of groups that were consulted before the decree was made tells a pretty interesting story in itself, seven bodies were named, but not a single operator, club or broadcaster made the cut. Requesting a public hearing now, in our view, is basically an admission that the sector’s voice is still not being heard.
We make no claims about what might have motivated the timing of this whole thing, but it’s certainly true that every extra step that was requested from the AGU is going to delay a decision further.
One federal judge has managed to find a middle path in a matter of a week, our question for Fux is, if a lower court can do that, why can’t the Supreme Court?
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