There is no end to the pressure on Allwyn's stock, which has registered a 41% decline this year and is trading at 4.5-year lows. Yesterday, 28/9/2026, it fell for a seventh consecutive trading session following the company's announcement regarding a ban on sports betting and online gaming in Brazil. Just one week before elections, the country's president Luiz Inácio Lula da Silva, under whose government the license was originally granted, is now temporarily revoking it.
The measure stipulates that companies will not accept new bets and customers have until October 5 to withdraw their funds from platforms, which must be deactivated by October 6. In the first instance, the measure has a duration of 120 days, plus any recess periods of the country's Congress, meaning until March 2027. However, if the measure is rejected by either house of Congress during this period or fails to be ratified by both houses before the period expires, it will automatically lapse. Allwyn has indirect exposure to Brazil as it holds a 36.75% stake in Kaizen Gaming, the operating company of Betano.
Stock "Plunge"
Allwyn was not the only stock to decline yesterday. Better Collective's stock plunged 31% to hit historic lows due to the ban. The company canceled its share buyback program and withdrew its financial targets for the 2027-2028 period, while noting that its full-year results will fall below target. Additionally, Entain shares recorded losses over 4% due to the ban; as the owner of Ladbrokes and Coral, it is affected, and while confirming its outlook, results are expected at the lower end of the range.
Allwyn completed 7 consecutive sessions of losses and hit a new 4.5-year low, even though the company stated that Betano is consolidated using the equity method and the impact will be limited. It closed at €11.29, down 4.65%. Sector stocks have been underperforming for several months, as many companies face tax increases (e.g., UK, US) as well as bans like Brazil's. Furthermore, competition from the rise of "prediction markets" hit them a few months ago. This year, Entain is down 52%, Flutter 66%, and Betsson 35%.
The impact on Allwyn
Betano represents only a portion of Allwyn's highly diversified operations. Its stake in Betano is accounted for under the equity method. Consequently, any impact on Allwyn's 2026 financial results from the temporary measure will be reflected primarily through its share of profits from associated companies consolidated under this method. Based on preliminary analysis conducted to date and the company's current understanding of the temporary measure, Allwyn estimates that if the measure remains in force for the remainder of 2026, the effect on its 2026 adjusted EBITDA margin will be limited, given Betano's relative contribution to its consolidated financials.
However, the previously announced guidance for an adjusted EBITDA margin of approximately 37% in 2026 will no longer apply, Allwyn announced. This estimate remains preliminary and subject to ongoing review as Allwyn continues to assess the impact of the measure and potential mitigation actions. The precise effect will depend, among other factors, on the timing and effectiveness of cost reduction measures for expenses that are not typically variable in the short term.
Analysts' reactions
Eurobank Equities reduced its target price for the stock to €11.10 from €13 due to the development, lowering its valuation to €1.5bn from €3bn. It had calculated that the stake in Betano would bring Allwyn earnings of €230-240m, as well as dividends exceeding €250m. Under the assumption that Betano completely loses its business in Brazil, Eurobank Equities estimates that €110-120m in annual earnings attributable to Allwyn are put at risk. This amount corresponds to approximately 6% of the group's adjusted EBITDA, including its participations. A similar loss could occur in annual cash distributions. In the short term, however, it notes that Betano's financial position may keep short-term dividend distributions to Allwyn resilient.
Citi reports that the primary short-term concern relates to Betano's fixed cost base, as certain expenses cannot be reduced quickly. It estimates that the negative impact on EBITDA will amount to at least 10% of adjusted EBITDA in Q4 2026 and 3% for FY 2026. Optima Bank notes that the situation in Brazil remains highly uncertain, particularly ahead of the upcoming presidential elections on October 4, 2026. From an economic standpoint, Brazil continues to face a significant fiscal deficit, suggesting that a full and prolonged ban on betting may prove difficult to maintain. A more likely outcome could be the mitigation of current measures through increased sector taxation or stricter regulation, rather than a permanent shutdown of online gambling operations.
However, these developments have significantly reduced visibility regarding future earnings and cash flow generation from the Brazilian market. Furthermore, the likelihood of adverse tax or regulatory changes continues to negatively impact medium-term earnings forecasts, leading investors to apply a higher risk premium until greater regulatory clarity emerges.
Giorgos Katikas
georgekatikas@gmail.com
www.bankingnews.gr
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