Brazil’s provisional measure ends betting authorisations and suspends operations

Brazil's Provisional Measure 1.394/26 ended the betting authorisations granted by the state, suspended operations in October and set out no compensation mechanism, according to an analysis by Luan Sperandio published in Gazeta do Povo. The regulated betting market had begun operating in January 2025. The measure's outcome is before Congress and the Supreme Federal Court.

Each operator paid R$30 million for a five-year authorisation and also had to meet technical requirements and make contributions to set up its operations, according to the analysis. In all, 85 authorisations were granted, adding R$2.55 billion to public coffers.

Sperandio wrote that the state has legitimacy to revise policies in light of evidence on social costs, including harm linked to problem gambling, indebtedness and betting advertising. The issue, in his assessment, lies in the terms of the measure: it provided no transition rules and did not consider the rights and expectations created by the state's own earlier decisions.

The analysis draws a parallel with other parts of Brazilian infrastructure. In the resumption of public service concessions, legislation requires prior compensation; authorised railways have protection for the amortisation of investments; and in telecommunications the law sets specific guarantees when an activity is prohibited in the public interest.

According to the analysis, the point with the greatest potential impact is the effect on infrastructure investment. Brazil competes with other countries for capital to finance roads, railways, ports, airports, sanitation and energy, projects that require substantial outlays recovered over decades. When the perceived risk of a jurisdiction rises, financiers tend to demand higher returns, and small changes in the cost of capital applied to large infrastructure portfolios can amount to billions of reais, the analysis says. Practical consequences include higher tariffs, lower bids at auctions, a greater need for public funds or projects that are not carried out.

Justice Luiz Fux is to examine challenges to the constitutionality of the intervention, including the extinction of the authorisations and the absence of compensation mechanisms, according to the analysis. The government maintains that the prohibition serves the public interest and that betting authorisations, by their legal nature, do not guarantee a right to reimbursement.

Sperandio wrote that these arguments must be examined in light of the Constitution and that the public interest does not amount to a general authorisation to disregard the financial effects of state decisions. In his assessment, a court ruling that endorsed the measure without qualification would weaken free enterprise and empty principles of the Economic Freedom Law, such as the good faith of private parties before the state and the exceptional character of state intervention. He concluded that investors who never had an interest in the betting market will also monitor the outcome.