Brazil Bans Betting: Better Collective Loses a Growth Market and Its Buyback in One Weekend

It has been some time since we last wrote about Better Collective (BETCO). Our view has stayed grim, while the market has kept pricing BETCO far above peers and looking past its structural risks. On Friday, one of those risks landed: Brazil's President Lula signed a Provisional Measure banning online sports betting and online casino, effective immediately. BETCO issued an update on Sunday evening. We credit the company for being quick and transparent, but we expect the market reaction to be painful.

Below we cover the ban, BETCO's update and what both mean for valuation. We have also opened our full “Structural Headwinds“ report to all readers, not just premium subscribers. Read it here. When we published it in February this year, the stock stood at SEK 121. It closed Friday at SEK 106, and we expect it to trade far below that after Monday.

On Friday, September 25, President Lula signed Provisional Measure 1,394, which took effect when it was published the same day. It prohibits the operation, offering, intermediation, and advertising of fixed-odds betting and online casinos, both online and in person, and applies to foreign operators serving Brazilian residents. Deposits stopped at once, ads must come down by October 5, and sites will be blocked from October 6. The market being closed was Brazil's regulated one, open only since January 2025: about BRL 37bn in gross gaming revenue in 2025, 85 licensed operators running about 190 brands, and some 25 million active bettors. The licensed operators paid BRL 30m each for five-year licenses and get no refund.

The measure came nine days before the October 4 presidential election, with polls showing about 75% support for a ban. Congress has 60 days, extendable by another 60, to convert it into law; otherwise it lapses. Even a lapse leaves the market dark for months. In our view, the ban will push players to black-market operators, where player protection disappears. It is a sad day for the industry, but the effects on BETCO cannot be ignored.

Better Collective responded on Sunday evening. Brazil was expected to deliver about EUR 45m of revenue in 2026, about 12% of group consensus, with about EUR 15m of that still to come this year, against an annual Brazil cost base of about EUR 10m. Most of the revenue is revenue share from licensed operators, so income stops when those operators shut.

Guidance for 2026 organic revenue growth is cut to 3-8%, from 7-12%. EBITDA before special items is now guided to change by -7% to +3%, against growth of 8-18% before. That puts 2026 EBITDA at about EUR 95-105m, down from EUR 110-120m. Net debt below 3x EBITDA is kept as a target. The share buyback is suspended with immediate effect, with about EUR 21m of the EUR 40m program unused, and the 2027-2028 targets are withdrawn.

The first hit is to earnings: Brazil seems to contribute about EUR 30m of EBITDA a year. Measured against pre-ban consensus, 2027E EBITDA falls from EUR 132m to about EUR 102m, down 23%. The impact grows further down the income statement, because depreciation and interest stay the same when Brazil goes: adjusted EBIT falls from EUR 87m to about EUR 57m (-34%), and adjusted EPS from EUR 1.07 to about EUR 0.66 (-38%). On those numbers, the share at SEK 106 trades at about 15x 2027E EV/EBIT, up from 9.6x.

The second hit is to the buyback: In our February report we argued that repurchases were the main thing holding up the share price, at times more than 20% of daily trading volume. Better Collective has spent about EUR 39m on buybacks under the last two programs, and the share still fell 12% between our report and September 25. That bid is now gone. With net debt of about EUR 300m and our estimate of about EUR 80m in 2026 EBITDA excluding Brazil, leverage on a run-rate basis is close to 4x. That makes a quick restart unlikely.

Our February price targets applied 12x EV/EBIT to our 2027E adjusted EBIT of EUR 57.6m, then 12% below consensus. Taking Brazil out of consensus brings the market's 2027E EBIT to about EUR 57m, level with our pre-ban estimate. With net debt of EUR 292m, 58.8m shares and EUR/SEK at 11.3, that gives SEK 53 per share at 10x EV/EBIT and SEK 75 at 12x.

If the ban takes full effect, it is a heavy loss for BETCO. Management will likely respond, so the final numbers will not land exactly here. But with the buyback halted as well, the multiple has lost its main support, and we see SEK 50-60 per share as a reasonable range. That equals about 10x 2027E EV/EBIT and sits 44-53% below Friday's close.

A move to peer multiples would go much further. The two closest listed peers, Grandstand (formerly Gambling.com) and Gentoo Media, trade at 5.6x and 4.9x NTM EV/EBIT, a median of 5.2x. On that multiple, EUR 57m of EBIT gives an enterprise value of about EUR 296m, barely above net debt of EUR 292m, which leaves almost nothing for shareholders. Excluding Brazil, BETCO trades at about 14.6x 2027E EV/EBIT at Friday's close, close to three times the peer median. The net debt also makes the equity sensitive to earnings: at 12x, every EUR 10m of EBIT moves the value by about SEK 23 per share.

If Congress lets the measure lapse after the election and the market reopens in early 2027, part of the EUR 30m returns, and management is already saying underlying demand remains. Even then, the months from October until the market reopens are lost; some operators may not come back after writing off their licenses, and any compromise is likely to keep advertising restrictions that hit affiliates directly. The next checkpoints are the investor call this morning, the October 4 election, the congressional deadline of about November 23, and Q3 results on November 18.

Licensed players such as Better Collective take the hit for following the rules, while black-market operators pick up the demand. Brazil is also not the only risk. Regulatory uncertainty remains high in several markets. Prediction markets such as Kalshi and Polymarket are a threat and possibly an opportunity, but they are new and largely unregulated. The biggest structural threat is still AI search, and Google's continued effort to cut affiliates out of the path between searcher and operator. We cover all of this in the full report.

We have held a negative view on Better Collective since 2024, and this event confirms two of the pillars in our February report: regulatory headwinds and buyback-supported pricing. We have now opened our full report, Structural Headwinds and Near-Term Weakness, to all readers here. We've also deliberately left this comment open and not locked to premium, as we hope it will limit losses for some.

Disclaimer

Not investment advice; for informational purposes only. The company discussed, Better Collective, is not a holding in our public portfolio.

Lind Research