Brazil Built a Betting Market, Regulated It, Then Banned It – Now the Courts Decide

Key Points

• ANJL filed ADI 8,027 and Anseja filed ADI 8,024 at the STF on September 28; both seek distribution to Justice Luiz Fux through prevention rules, alongside a joint ANJL/IBJR petition already before him in the related ADIs 7,721, 7,723, and 7,749.
• ANJL and IBJR cited SPA/SIGAP data in their filing showing monthly betting deposits fell 42.2% between October 2025 and June 2026; the government’s Explanatory Memorandum projects its own tax revenue losses of R$1.541bn in 2026 alone, but the industry disputes whether the PM text itself met the constitutional assessment requirement.
• Bet Legal monitoring data identified 415 new illegal betting sites within 48 hours of the ban; the IBJR’s May 2026 study now puts current illegal market share at 38% to 44%, down from earlier estimates but already substantial.

Three Industry Bodies Take PM 1,394 to Brazil’s Highest Court

Brazil’s gambling sector challenged Provisional Measure 1,394 before the weekend was over. ANJL and IBJR filed a joint emergency petition with the STF on September 28, addressed to Justice Luiz Fux. Fux already oversees ADIs 7,721, 7,723, and 7,749, three earlier proceedings examining Brazil’s betting legislation. ANJL separately filed ADI 8,027, a direct constitutional challenge targeting PM 1,394. Anseja filed ADI 8,024 the same day, requesting distribution to Fux through prevention, the judicial rule that routes related constitutional matters to the judge handling prior connected cases.

The joint petition seeks suspension of the measure until Congress acts, or the STF rules on existing constitutional challenges. If the court refuses a full suspension, two alternatives are offered: exempting operators with valid licences from the measure’s scope, or granting at least six months for an orderly wind-down.

The Urgency Argument the Associations Are Staking Their Case On

Brazil’s constitution requires demonstrated urgency before a provisional measure can carry immediate legal force. ANJL and IBJR argue the government has not met that standard, citing official deposit data in support. Their STF filing references SPA/SIGAP data showing monthly betting deposits fell 42.2% between October 2025 and June 2026, from R22.59bntoR13.06bn. A sector where monthly deposits declined steadily over eight months, the associations argue, cannot satisfy the constitutional threshold for emergency presidential intervention.

The constitutional challenge cuts deeper than numbers. The executive branch that authored and championed Law 14,790 in December 2023 is now dismantling it through a provisional measure. ANJL and IBJR call the action “opportunistic and extremely serious,” arguing it causes “irreparable harm to the country itself.” Operators paid R$30 million per authorisation under state-set rules, built compliance systems the government mandated, and hired locally under a framework that appeared permanent. Their filing captures the contradiction directly: the Brazilian state “invited private agents to enter the market and now, a short time later, intends to empty the economic content of the authorisations it itself granted.”

Anseja’s ADI 8,024 identifies additional constitutional defects. The association argues PM 1,394 improperly covers areas a provisional measure legally cannot address, including seizure of financial assets and classifying advertising as a criminal offence. Anseja also contends the measure lacked adequate procedural safeguards. These are formal defects the STF would consider independently of the urgency dispute.

The Government Requests Time While Deadlines Continue Running

Brazil’s Attorney General’s Office asked Justice Fux for 72 hours to prepare the government’s response on Monday, citing agencies responsible for the challenged regulations needing consultation time. AGU head Jorge Messias said the measure had been “rigorously validated” and that the government was “completely at ease.” No injunction has been granted; player withdrawals close October 5, betting sites go offline October 6, and the 85 authorisations subject to termination expire October 25.

Congress is already reviewing PM 1,394 but is not expected to conclude its consideration before the October 25 termination date. Chamber Speaker Hugo Motta and Senate President Davi Alcolumbre have yet to name the joint committee’s rapporteur. If Congress enters recess at year’s end, a final vote could slide to February 2027.

A Fiscal Dispute the Industry Is Taking to Court

The industry’s filing raises a precise constitutional argument about fiscal impact. The government’s Explanatory Memorandum for PM 1,394 projects tax revenue losses of R1.541bnin2026, R5.150bn in 2027, and R5.330bnin2028,plusR268.8m in inspection-fee losses over the three years. Those estimates appear in the memorandum, not in the provisional measure’s own text. ANJL and IBJR argue the PM itself failed to meet the separate constitutional requirement under Article 113 of the Transitional Constitutional Provisions Act for a prior budgetary impact assessment, and dispute whether the memorandum’s projections captured the full economic effect.

The licensed sector’s 2025 contributions give the dispute a concrete scale. Operators generated R9.95bninfederaltaxesandR2.5bn in grants; inspection fees added R95.5m.The85authorisationssubjecttoterminationrepresentapproximatelyR2.55bn in fees already collected, with PM 1,394 explicitly ruling out any refund.

Flutter confirmed the ban could cut 2026 revenue by approximately $70m, with adjusted EBITDA reduced by roughly $20m. Entain now expects underlying full-year earnings at the lower end of its £910m to £960m guidance range. Betano is separately preparing its own legal action to protect the rights attached to its five-year licence, as Allwyn confirmed Monday.

Football clubs are also holding out. A government meeting with clubs from all four national divisions collapsed after a boycott organised by Palmeiras and Flamengo executives. Série A clubs collected around R$1.03bn in betting sponsorships in 2025, equal to 7.2% of total club revenue, and debt restructuring, the government’s proposed alternative, cannot substitute for current income.

The Illegal Market Moved Without Waiting for Anyone

The first and foremost outcome of this prohibition could be seen in the commercial rather than the legal sphere. As noted in Bet Legal monitoring data by Iron Security, 415 new illegal betting sites were found only two days after the announcement of PM 1,394, which is a 141% rise in the rate of creation of new betting websites in contrast to the period preceding the prohibition. The market share of illegal websites according to the IBJR research conducted in May 2026 is estimated at 38%-44%, which is lower than in the previous IBJR survey of 2025 where the estimate was 41%-51%. However, this is a significant percentage.

Sports integrity became the first formal safeguard to go. ANJL terminated its cooperation agreement with Sportradar, the global match-fixing monitoring company, directly citing PM 1,394. ANJL president Plínio Lemos Jorge said sport, athletes, and bettors all stand to lose as players shift to illegal platforms. In his view, no illegal operator has any interest in detecting match manipulation; licensed companies were legally required to monitor it actively.

Expert Analysis

The STF challenge could succeed, and the question is what that actually resolves. Ricardo Bianco Rosada, CEO of brmkt.co, framed the harder problem in the days after the ban: “Brazil sold five-year licences, charged a licence fee, demanded capital, compliance and a local structure, and revoked it all by decree before the first year was even up. This is not a debate about betting. It is the state breaching its contract with those who trusted the rules the state itself wrote.”

We note the timing of PM 1,394 without overstating its implications. The provisional measure was signed nine days before the October 4 first-round election. A Reuters survey found roughly three-quarters of Brazilians supported a complete ban on betting platforms. Hours before signing in São Paulo, Lula held a handwritten “End of the bets” sign at a rally in Recife. The government describes PM 1,394 as a genuine public-health and household-finance intervention; critics describe it as a political calculation timed for maximum electoral effect. The documented sequence of events establishes the timing; it does not settle the question of intent.

What concerns us more than the electoral context is the structural signal this sends. Even if the STF suspends the measure or Congress lets it lapse, the precedent now exists. Any business holding a regulated-sector licence in Brazil must now price in a new variable: a state-issued permission can be cancelled through a provisional measure, without compensation, before the contract period expires. As Rosada put it, the warning extends beyond gambling: “Legal certainty is the one thing a country can’t buy back once it has lost it.” The 415 illegal sites appearing within two days also raise a practical question the government’s public-health framing has not addressed. If protecting vulnerable bettors is the goal, shifting the market to unregulated operators achieves the opposite result.