Brazil’s betting ban: What it means for impairment testing and year-end reporting

Growth rates, margins and discount rates are debated at length every year-end. The licence to operate in a market rarely is. On 25 September 2026 Brazil showed how fragile that assumption can be. Provisional Measure 1.394 prohibited fixed-odds betting in Brazil with immediate effect, whether offered physically or online, covering both sports betting and online casino-style games.^1,2 Lotteries authorised by law are not affected.² Under the measure, all 85 federal licences (formally, authorisations to operate), each acquired for R$30 million, are due to be extinguished on 25 October without refund or compensation, as are authorisations granted by individual states.^1,3,4

A ban changes expected cash flows. Impairment models should test those effects explicitly, for example through scenarios, and avoid reflecting the same regulatory risk again in the discount rate. The consequences reach well beyond Brazil and beyond this year-end.

This raises a question likely to come up in many year-end discussions. If a model already carries a premium for regulatory risk and a scenario for the ban is now added, has the same risk been counted twice?

Where things stand at 9 October 2026

• Licensed operators were required to take their sites offline ten days after publication, by 6 October.^1,3 About R$1.33 billion was reported to remain in player accounts on 5 October, with arrangements being made for banks to return the remaining balances.⁵
• Industry associations have asked the Supreme Court to suspend the measure, supported by 21 football clubs. On 2 October Justice Fux gave the Attorney General’s office 72 hours to provide information.^6,7 Its response, filed on 5 October, opposes suspension and argues that operators have no right to a refund of licence fees or to compensation. No ruling has been reported so far, and press reports suggest that Justice Fux may wait until after the 25 October runoff.^8,18
• Operators are also challenging the measure in the lower courts. On 8 October a federal court in São Paulo allowed one operator, Stake, to resume operating until 25 October, subject to conditions, but refused a refund of the licence fee or compensation.^19,20 The government has said it will appeal, and the industry association ANJL filed a collective claim on behalf of 32 operators on 7 October.¹⁹
• Congress has set up a joint committee and extended the deadline for amendments to 13 October. By 6 October, 48 amendments had been filed, including proposals to keep sports betting, allow a transition period for sponsorship contracts and refund part of the licence fees. The committee’s chair and rapporteur have not yet been named.²¹ The measure lapses unless Congress approves it within 120 days (60 days, extendable by a further 60), with the count paused during recess.^4,9
• The presidential runoff is on 25 October, the day the licences are due to be extinguished.¹⁰ The measure was issued by the Lula government.¹ Flávio Bolsonaro has been reported as saying he would ban online casino but keep sports betting; this has not been set out in a formal programme.^11,12

Events are moving quickly and this picture may change in the coming weeks.

The licence may be lost even if the ban is lifted

Under the measure, licences are due to be extinguished 30 days after publication, which is likely to be well before Congress decides whether to approve it.¹ If the measure later lapses or is amended, it is uncertain whether extinguished licences would be restored or whether operators would need to apply, and pay, again. That would depend on the legislation that follows. Even if the market reopens, the previous economics may not return.

The reasons for the ban also suggest that regulatory risk will persist. The government’s explanatory memorandum links the measure to gambling-related mental health problems and rising household debt.² Scepticism about betting is also visible beyond the government, including a bill from an opposition deputy to end online betting and a July poll in which most supporters of both leading candidates backed banning betting sponsorship in football.^13,14 A change of government may change the shape of any future regime, but it is unlikely to remove the risk.

What this means at year-end

A significant adverse change in the legal environment is an impairment indicator under IAS 36.12. Assets within the scope of IAS 36 that depend on Brazilian cash flows therefore need to be tested at the next reporting date, in addition to the annual goodwill test. The accounting, however, depends on the type of asset:

• Licences. If the measure remains in force on 25 October, the licences will have been extinguished before a December reporting date, so if the authorisations expire, operators should assess whether the related recognised assets must be derecognised under IAS 38, taking account of any remaining rights and expected economic benefits. For reporting dates before the authorisations expire, operators should assess whether the measure indicates impairment and whether any future economic benefits remain; the conclusion depends on the rights held and circumstances at that date.
• Goodwill, acquired brands and other non-financial assets are tested under IAS 36, individually or as part of a cash-generating unit.
• Investments in subsidiaries held at cost in a parent’s separate financial statements are also assessed under IAS 36.
• Equity-accounted investments in associates and joint ventures are first assessed under IAS 28 for objective evidence of impairment. Where there is such evidence, the whole carrying amount is tested as a single asset under IAS 36.
• Receivables, including intra-group balances in separate financial statements and amounts due from Brazilian customers, fall under the expected credit loss model in IFRS 9, not IAS 36.
• Equity investments measured at fair value are not tested for impairment. The effect of the ban flows through the fair value measurement itself, which often relies on significant unobservable inputs that will need updating.

The impact is not limited to consumer-facing operators. Suppliers such as platform, games and live-casino providers, together with affiliates and payment providers, are exposed through customer relationships, contract assets and receivables. Investors holding minority stakes in operators active in Brazil may find that their exposure is indirect but significant.

Leaving Brazil can also create obligations. These may include onerous sponsorship and supplier contracts, restructuring and severance costs, and daily fines of R$200,000 where operators fail to meet specified obligations that support player refunds, such as maintaining sufficient liquidity and sending bettor information to banks.¹

The next question is what can be saved. If staff, technology and brands can be redeployed in other markets, or in lotteries, which the ban does not cover, part of their value may be preserved. Any value-in-use forecast should distinguish supportable use of assets in their current condition from benefits dependent on an uncommitted future restructuring or enhancement. If not, the assets may be stranded. Either way, forecasts prepared before 25 September will need revising before they can support year-end carrying amounts.

Three judgements are likely to shape the outcome.

Identify the CGU

The first is the level at which assets are tested. Where an asset’s recoverable amount cannot be estimated individually, it is determined for the smallest identifiable group of assets that generates largely independent cash inflows, known as a cash-generating unit (CGU).¹⁵ A local licence and brand do not, on their own, make a Brazilian operation a separate CGU. The test is whether its cash inflows are largely independent of the rest of the group, for example because players, pricing and revenue are distinct and the business is monitored separately. Where that is the case, testing Brazil within a wider regional or group CGU, so that surplus value elsewhere absorbs the loss, is unlikely to be appropriate. Where shared platforms genuinely drive cash inflows across markets, a wider CGU may be justified, but the reasoning needs to be documented. Any change to CGU structures this year is likely to draw scrutiny.

Measure uncertainty

The second is how uncertainty is measured. IAS 36 requires recoverable amount to reflect conditions at the reporting date, not to wait for them to settle. For December year-ends, a congressional decision may come after the balance sheet date but before the accounts are signed, so waiting for clarity is not a realistic option. A probability-weighted cash-flow approach can make supportable outcomes explicit, provided the cash flows, timing and discount rate are consistent. The table below provides illustrative outcomes:

Avoid double-counting risk

The third is consistency. Where the scenarios capture regulatory risk, the discount rate should not reflect the same risk again. Scenario weights need to be supportable and documented, and results should be cross-checked against market evidence such as share price movements and analyst views.

Disclosure: telling a consistent story

With judgements of this size, disclosures are likely to be read as carefully as the numbers. Areas to plan for include:

• IAS 36: impairment losses by asset and CGU, the basis for recoverable amount, key assumptions including scenario weights, and sensitivity to reasonably possible changes.
• IAS 1 (or IFRS 18 where it is applied early; IFRS 18 replaces IAS 1 for annual periods beginning on or after 1 January 2027¹⁶): significant judgements, such as CGU boundaries and the treatment of licences, and sources of estimation uncertainty, such as the congressional vote and pending litigation.
• IAS 37, which distinguishes three positions:
  • Provisions, where a present obligation is probable and can be reliably estimated, for example onerous contracts, a restructuring that meets IAS 37’s recognition criteria or fines already incurred.
  • Contingent liabilities, disclosed unless remote, where an outflow is possible but not probable or cannot be measured reliably. The Attorney General’s lawsuit against 17 operators, reported on 28 September, and seeking at least R$2.6 billion for public healthcare costs and at least R$1 billion in collective moral damages, will need to be assessed by the operators named in it.¹⁷
  • Contingent assets, such as any claim against the Brazilian state, disclosed only where an inflow is probable and recognised only when it is virtually certain. The government has already argued before the Supreme Court that no refund or compensation is due.⁸
• IFRS 5: assess whether the criteria for a discontinued operation are met.
• IFRS 8: assess whether the change affects reportable segments or segment disclosures.
• IAS 10: for reporting dates before 25 September, assess whether the measure is a material non-adjusting event requiring disclosure if it occurred before the financial statements were authorised for issue. Separately assess whether later information provides evidence of conditions already existing at the reporting date.
• Going concern: where Brazil represents a significant part of revenue.

The impairment note, the narrative report and investor communications should all tell the same story.

Beyond year-end

Brazil may also change how the sector is valued after this reporting cycle.

Investors and acquirers may need to price regulatory concentration more explicitly. A group with a large share of earnings in a single, politically exposed market carries a risk that a blended discount rate may not fully capture.

Licences in other markets may deserve a fresh look. Where a licence can be withdrawn, or made uneconomic by a change in tax, assumptions about its useful life and recoverable amount may need to be revisited.

Contracts may change as well. Sponsorship, supplier and marketing agreements signed under Brazil’s regulated framework are now being tested, and change-in-law protections can be expected to feature more prominently in future negotiations.

Seven questions for CFOs and boards

1. Have we identified every asset, investment and receivable that depends on Brazilian cash flows, including those held through associates?
2. Is Brazil a separate cash-generating unit, and is that conclusion documented well enough to withstand challenge?
3. Have we assessed whether each licence should be impaired or derecognised, and documented why?
4. Is regulatory risk reflected in either our scenarios or our discount rate, without being counted twice?
5. Have any sponsorship or supplier contracts become onerous as a result of the measure, and what are the implications for lease arrangements?
6. Are our disclosures ready for a congressional decision that may come between year-end and sign-off?
7. Beyond the year-end numbers, what are the next steps for the business, and can the capabilities built for Brazil create an opportunity elsewhere?

How we can help

None of these questions has a single right answer. The harder part is often reaching a view and being able to support it.

We can help you map where Brazilian exposure sits across the group, build and test scenarios, and challenge key assumptions and disclosures before they reach the board, often through a short workshop with the CFO and management team. The conclusions remain management’s. Our role is to help you reach them on a well-supported basis and explain them clearly to your board, auditors, investors and lenders.

If any of these questions apply to your business, we would welcome a conversation.