Brazil Could Owe Gambling Operators Compensation Even if Ban Survives, Says Legal Expert Luiz Felipe Maia

Brazil’s gambling operators may have a stronger case for getting their money back than getting their businesses reopened. According to gaming attorney Luiz Felipe Maia, the biggest legal vulnerability in President Luiz Inácio Lula da Silva’s online gambling ban is the government’s attempt to shut down licensed businesses without compensating them.

“The strongest challenge is not that Brazil lacks the power to prohibit betting. It does,” Maia, founding partner of Maia Yoshiyasu Advogados (MYLAW), told Gambling Insider.

September’s provisional measure gave licensed operators 30 days to close and explicitly ruled out refunds or compensation. Maia identifies the exclusion of compensation as a potential constitutional weakness, alongside the treatment of existing authorizations and the short transition period.

“The strongest challenge is not that Brazil lacks the power to prohibit betting. It does. The question is whether it can build a licensing regime, collect substantial fees, authorise companies to operate, and then terminate those authorisations within 30 days while declaring that no operator is entitled to a refund or compensation.”

Lula won reelection on October 25 with 51.79% of the vote, defeating Flávio Bolsonaro, who received 48.21%. The result strengthens the president’s political position, but Congress and the Supreme Federal Court (STF) could still determine whether the ban survives in its current form.

Brazil’s Supreme Court May Challenge Compensation Rules Without Overturning Gambling Ban

Maia does not expect the STF to necessarily overturn the ban simply because operators were previously licensed. Brazil has the authority to prohibit betting, he said, and a license does not guarantee that the law will remain unchanged for its entire duration.

Instead, he sees stronger grounds for challenging the government’s treatment of existing licenses, the 30-day deadline, and its refusal to compensate operators. The ban’s application to licenses issued by individual states and the Federal District could also raise questions about the division of powers between federal and state authorities.

“I would be cautious about predicting that the STF will strike down the entire prohibition,” he said. “The Court may be more receptive to a narrower intervention concerning the treatment of existing authorisations, the transition period or the blanket exclusion of compensation.”

Maia considers a challenge based on the provisional measure’s urgency less promising because courts generally defer to the political branches on that question. He believes a ruling concerning existing authorisations or compensation could also affect other regulated industries that rely on government-issued licenses.

Unused Licensing Fees Offer Operators Strongest Compensation Argument

Brazil’s regulated betting market opened in January 2025, following legislation passed under Lula’s administration. Companies paid licensing fees and established local operations to comply with rules introduced less than two years before the shutdown.

“An authorization is not a constitutional guarantee that legislation will remain unchanged for its full term,” Maia explained. 

“The stronger argument is that a lawful change of policy does not automatically extinguish the State’s responsibility for the specific losses it imposes on companies that followed its rules.”

Maia identifies unused licensing fees as the clearest potential claim. Other costs, including compliance spending and investments in local operations, would require evidence of when the money was spent, whether it could be recovered or repurposed, and how directly the losses resulted from the ban.

Flutter’s $674 Million Investment Is Not Automatically Recoverable

Flutter Entertainment estimates that a shutdown lasting through the end of 2026 would reduce its revenue by approximately $70 million and adjusted EBITDA by $20 million. Those projections show the potential commercial impact of the ban, although they are not themselves calculations of recoverable damages.

Flutter also spent heavily to establish its position in Brazil, acquiring a 56% stake in NSX in 2025 and combining Betnacional with its existing Betfair Brazil business. The transaction involved $674 million in total consideration, although that figure does not represent money paid to the Brazilian government.

“Flutter’s projected $70 million reduction in 2026 revenue is not $70 million in lost profit,” Maia said. “Nor should the reported $674 million consideration for NSX be treated as cash paid to the Brazilian government or as an amount automatically recoverable from it.”

Instead, an operator’s potential claims could include unused licensing fees, unrecoverable compliance costs, contract termination expenses, and losses associated with sponsorship agreements. Lost profits could also form part of a claim, but Maia said operators would face a much higher evidentiary burden.

To establish lost profits, operators would need reliable financial projections, adjusted for expenses avoided during the shutdown and the uncertainty of future earnings. 

Congress Could Reopen Betting Under Tougher Restrictions

Lula’s victory has reinforced the political uncertainty facing Brazil’s licensed operators, particularly after the government introduced the prohibition shortly before the election. His reelection does not, however, mean the provisional measure will necessarily become permanent law.

Congress can still amend or reject the measure, or allow it to expire. Separately, the STF can examine its constitutionality, meaning the legislation could be affected by court proceedings regardless of what lawmakers decide.

“Lula’s re-election makes a voluntary return to the previous regime politically unlikely in the near term,” Maia said. “That does not settle the fate of the provisional measure.”

Maia sees a negotiated reopening as possible, although it could involve tighter restrictions on gambling products and advertising, stronger protections for minors and vulnerable consumers, and additional measures against illegal operators. No such compromise has been agreed on, and the government could still seek new restrictions if the STF suspends the current ban.

“A court ruling against this measure would not immunize the industry from future regulation,” he said.

Offshore Gambling Data Falls Short of Proving Consumer Harm

Brazil’s offshore gambling market could become part of the constitutional challenge if operators can demonstrate that prohibition has undermined consumer protection. Maia cautioned that increased visibility of illegal sites is not, on its own, evidence that the ban has caused greater harm.

As Gambling Insider previously reported, Bet Legal detected an increase in unauthorized betting domains from 381 on September 25 to 1,071 on September 29. Separate data from Blask showed offshore operators’ share of Brazilian gambling-related search demand rising from 3.4% on September 24 to 11.3% on September 30.

Those figures do not establish how much actual betting activity has moved offshore. For Maia, the figures raise a legal question rather than provide an answer. To challenge the ban on proportionality grounds, operators would need to show that consumers have moved to unauthorized sites and that the prohibition has worsened their protection.

“If prohibition pushes customers towards offshore sites that ignore age checks, responsible gambling controls and payment safeguards, that is relevant to proportionality,” he said.

Maia said a credible challenge would require comparable traffic and payment data, evidence of consumers accessing unauthorized platforms, and changes in fraud complaints and harmful gambling indicators. It would also need to examine how effectively authorities have enforced the ban and account for gambling-related harm that existed before the shutdown.

“A court will expect evidence of the net consumer protection effect, not an assumption that regulation solves every problem,” Maia said.

Operators Urged to Pursue Legal Challenges and Prepare Compensation Claims

“I would pursue the constitutional and legislative tracks now, while preparing a compensation case in parallel,” Maia said. “Waiting for Congress alone leaves the operator exposed to a measure that is already producing effects.”

That means retaining authorization records, licensing payments, contracts, board papers, investment decisions, and financial forecasts, as well as evidence of efforts to limit losses. Maia also advises operators to continue meeting their outstanding obligations to customers and regulators.

“If the market reopens, those records will still be valuable,” Maia said. “If it does not, they will determine whether a compensation claim is credible rather than merely large.”

Brazil’s operators paid for the right to enter a regulated market that the government subsequently shut down. Whether they can recover any of that money remains an open legal question, and one that could outlast the fight over the ban itself.