Stake To Challenge Court Ruling Reinstating Brazil Betting Ban

Stake is preparing to challenge a Brazilian court ruling that overturned a temporary injunction protecting the operator from the country's recently introduced betting ban.

The operator had initially secured permission to continue operating until 25 October, despite the prohibition introduced by President Luiz Inácio Lula da Silva in late September. However, the injunction was suspended the following day by Luis Antonio Johonsom di Salvo, President of the Federal Regional Court of the 3rd Region (TRF-3).

The reversal means Stake is once again subject to the ban, although its legal representatives have confirmed that further proceedings are being prepared.

The case could have wider implications for Brazil's gambling industry, with licensed operators seeking to challenge the prohibition and recover investments made following the introduction of the regulated market in January 2025.

Stake Preparing Further Legal Challenge

Stake's legal proceedings are being handled by Brazilian law firm Bichara e Motta Advogados, whose partner Udo Seckelmann confirmed that the operator intends to contest the latest ruling.

“Of course, this is not over,” Seckelmann said. “This is just one setback that happened. We are drawing up some strategies to overturn this.”

The legal team is considering two possible approaches, although Seckelmann declined to disclose the specific grounds on which the suspension will be challenged.

A central argument concerns the financial commitments operators made to enter Brazil's regulated market. Companies were required to pay a BRL30 million licensing fee and maintain financial reserves of at least BRL5 million, while international operators also had to establish a local presence.

Stake argues that the government's decision to prohibit an activity it had recently licensed undermines the legal certainty on which those investments were based.

The operator's representatives have also questioned the evidence supporting the prohibition, arguing that concerns surrounding gambling addiction and household debt have failed to adequately distinguish licensed businesses from illegal operators.

“The reasoning that was raised by the federal government to issue the provisional measure, it was not grounded on any relevant studies and statistics and aspects that showed that the regulated market in Brazil was causing all these problems,” Seckelmann said.

Government Challenges Initial Injunction

The suspension followed an intervention by Brazil's Attorney General's Office (AGU), which argued that allowing Stake to continue operating would provide an unfair competitive advantage over other gambling companies affected by the ban.

Seckelmann criticised the decision and suggested that the AGU had deliberately sought a ruling from the president of TRF-3 because of his perceived sympathy towards the federal government's position.

These allegations reflect the legal representative's interpretation of the proceedings and have not been established as findings of judicial misconduct.

Meanwhile, two of Brazil's principal gambling trade associations have brought a separate constitutional challenge before the Supreme Federal Court (STF), seeking to overturn the prohibition.

Stake's legal team believes that a favourable ruling in its own proceedings could strengthen the position of other licensed operators pursuing similar challenges.

Industry Warns Of Lasting Economic Damage

The legal dispute comes amid growing concerns about the economic consequences of Brazil's betting ban.

According to a partial survey conducted by the National Association of Games and Lotteries, more than 3,500 workers have already lost their jobs in the gambling industry since the provisional measure was introduced.

Operators have also faced the termination of commercial agreements, disruption to existing operations and mounting financial losses as they await clarity over the legality of the prohibition.

Seckelmann warned that delays in resolving the dispute could make it increasingly difficult for businesses to resume operations, even if the ban is eventually overturned.

“Our operation is frozen. We have to terminate several contracts. We have to fire a lot of people. We’re losing money here,” he said, describing the circumstances behind Stake's request for temporary judicial protection.

The wider constitutional challenge is not expected to be resolved before Brazil's presidential election runoff on 25 October, leaving the industry's immediate future uncertain.

For Stake, the priority remains securing renewed legal protection while the broader dispute progresses through Brazil's courts, with the outcome potentially influencing how other licensed operators respond to the ban.