Entain (LSE:ENT), the global sports betting and gaming group, announced that Brazil published an executive measure stripping all operators of their authority to run online sports betting and gaming with immediate effect.
The measure needs Congressional approval within 120 days to remain in force, and lawmakers could reject, approve or amend it, leaving the longer-term outcome uncertain.
Entain called the move "disappointing", saying it came without consultation of industry stakeholders given its adverse consequences, though it confirmed its Brazilian operations are complying.
Brazil was expected to contribute about 5% of group online net gaming revenue (NGR) in the current financial year, though its EBITDA contribution was already expected to be modest given a competitive operating environment.
Entain reconfirmed full-year underlying EBITDA guidance of £910m to £960m and an online underlying EBITDA margin of 21-22%, both set out at its half-year results on 13 August, but now expects to land toward the lower end of each range because of the ban.
Excluding Brazil, the group remains on track to hit the top end of its 5-7% online NGR growth guidance at constant currency.
Including Brazil, and assuming the ban holds for the rest of the year, Entain now expects online NGR growth of 4-6% at constant currency, down from the 5-7% range it gave alongside half-year results that showed 7% online NGR growth and a leverage ratio flat at 3.1 times.
The company said it will continue to monitor developments in Brazil and provide updates as appropriate.