Brazil's election runoff clouds the outlook for regulated betting after Lula's ban

Brazil's presidential election will go to a second round on 25 October, leaving the future of the country's licensed online gambling sector unresolved. The regulated market, which launched less than two years ago, was banned in late September by President Luiz Inácio Lula da Silva through a provisional measure. The measure now goes to the National Congress, which will decide whether to make it permanent.

In the first round, Liberal Party leader Flávio Bolsonaro took 47.03% of the vote against 45.16% for Lula. Neither passed the 50% threshold needed to avoid a runoff. Brazil's two main gambling trade bodies have already asked the Supreme Federal Court to overturn the ban.

Ramiro Atucha, CEO and founder of Atucha Strategic Advisory, told iGB he fears the runoff could hurt the sector's efforts to reverse the measure. He said public opinion on betting is strongly negative and that the evangelical vote matters to both candidates, so he expects both to take a harder line against the regulated industry, particularly online casino, before the vote.

Congress may be a more favourable arena. Bolsonaro's Liberal Party won 121 of the 513 seats in the Chamber of Deputies, its largest bloc there since 1990, though well short of the 257 needed for a majority. Atucha argued that legislators work on a longer horizon and may give more weight to signed agreements and the legal consequences of lawsuits. Udo Seckelmann, partner at Bichara e Motta Advogados, cautioned that opposition strength would not automatically lead Congress to reject the measure. He said the debate is no longer purely partisan and increasingly centres on whether prohibition protects consumers better than regulation.

A Bolsonaro win would not necessarily restore the previous framework either. He called the ban populist, hypocritical and politically motivated, but has previously said he would ban online casino and keep only sports betting. Seckelmann said any new government would have to balance consumer protection against legal certainty, investment, tax collection and the risk of players moving to offshore operators.

Investor confidence is another concern. Atucha noted that operators paid BRL30 million per licence, built local structures and are now cutting staff. He said the harder task would be rebuilding international investors' trust in Brazil's respect for institutions, agreements and licences it granted itself, which he said could take years.