Evolution CEO Criticizes Brazil Betting Ban Amid Global Challenges

Evolution CEO Criticizes Sudden Brazil Betting Ban – Operator Navigates Regulatory and Security Challenges Across Global Markets

Key Takeaways

• Evolution temporarily closed its Sao Paulo studio following Brazil’s late September gambling ban.
• Third-quarter net revenue reached €526.1 million, reflecting a 3.7% year-on-year increase.
• The company maintains its full-year profit guidance regardless of fourth-quarter revenue from Brazil.
• European operations experienced a 4.7% year-on-year decline amid ongoing regulatory and taxation adjustments.

Sudden Ban in Brazil Forces Temporary Studio Closure

Brazil President Luiz Inacio Lula da Silva announced a nationwide gambling ban in late September. The prohibition comes less than two years after the country officially launched its regulated online market. Evolution CEO Martin Carlesund described the abrupt policy shift as a total negative for the entire industry.

Evolution immediately responded by temporarily closing its live casino studio in Sao Paulo, a facility the company opened just last year. Carlesund expressed surprise during the third-quarter earnings call, telling analysts he was flabbergasted by the situation. He characterized the regulatory reversal as a populist agenda dismantling a newly established legal framework.

The Brazilian betting sector is currently waiting for the Supreme Federal Court to determine whether the presidential ban is unconstitutional. Carlesund confirmed the closed studio is equipped to reopen on short notice if the court strikes down the prohibition.

LatAm Growth Remains Strong While Guidance Stands

The recent ban went into effect in early October and did not impact Evolution’s third-quarter results. The company’s Latin American operations posted a 23.1% year-on-year growth during the third quarter. Analysts questioned if the company could still meet its profitability targets if the Brazilian market generated zero revenue through the end of the year.

Carlesund confirmed that the full-year margin guidance remains unchanged despite the market suspension. He noted that the country is not strictly ring-fenced, meaning the company will monitor how player activity develops over the coming months. No clear timeline exists for when the regulatory situation might stabilize.

European Market Underperforms Amid Regulatory Distractions

Overall company financials showed positive movement, with third-quarter net revenue rising 3.7% to €526.1 million. Adjusted EBITDA also increased by 2.7% to reach €345.9 million. This marked the first three-month period since 2024 where all of Evolution’s operating regions posted quarter-on-quarter growth.

Performance in Europe contrasted sharply with the double-digit year-on-year growth seen in Latin America, Africa, and North America. The European segment grew just 0.4% quarter-on-quarter and recorded a 4.7% year-on-year decline. Carlesund labeled the European results as not exciting and stated the company needs to perform better in the region.

The CEO attributed the sluggish European performance to constant adjustments to regulatory changes and shifting tax requirements. He suggested these external parameters are distracting the company from focusing on customer relationships and core business operations.

Cybercrime in Asia Requires Long-Term Technical Solutions

Evolution continues to face operational challenges in the Asian market related to product theft and cyberattacks. Carlesund previously highlighted that unauthorized entities were stealing the company’s products. Asian revenue increased by 1.6% year-on-year, which the CEO described as a small step forward.

The company is implementing long-term technical measures to protect its distribution network against these cybercrime issues. Carlesund acknowledged that finding a quick solution is unlikely and expects continued volatility in the region.

Defamation Lawsuit Against Playtech Moves Forward

Evolution remains locked in a legal dispute with competitor Playtech and corporate intelligence firm Black Cube. Playtech commissioned Black Cube in 2020 to investigate Evolution’s activities, resulting in a dossier alleging Evolution operated in sanctioned and prohibited markets.

Evolution sued Black Cube and is holding Playtech accountable in a related defamation case. Carlesund confirmed the full lawsuit is active, with new legal steps being taken daily.

Our Assessment

Evolution is managing a complex mix of external pressures across its primary operating regions. The abrupt regulatory reversal in Brazil highlights the political risks inherent in newly opened gambling markets, forcing immediate operational halts like the Sao Paulo studio closure. At the same time, the European market’s year-on-year revenue decline illustrates how continuous tax and compliance adjustments can drag down established business segments. While overall corporate revenue continues to grow, unresolved cybercrime in Asia and the ongoing legal battle with Playtech indicate that the company must divert significant resources toward security and litigation.