Provisional Measure No. 1,394/2026: what changes for fixed-odds betting companies and what needs to be decided now

Written during SBC Summit in Lisbon, where the provisional measure dominated industry conversations. The questions executives raised most often over these days are addressed below.

Provisional Measure No. 1,394/2026 (Medida Provisória, or MP), published on September 25, 2026, prohibits fixed-odds betting in Brazil and terminates the federal authorizations granted under Law No. 14,790/2023. Less than two years after the sector was regulated, companies that invested to comply with the legal framework now find themselves operating under a wind-down schedule of just a few weeks.

This article sets out, objectively, what the MP requires, where the open legal questions lie and which decisions cannot wait. It is no substitute for case-specific analysis: each authorization has its own start date, contractual structure and exposure.

A short timeline — and that is what defines everything

The most sensitive aspect of the MP is not the prohibition itself but its speed. The text sets out a sequence of obligations that begin immediately and conclude in roughly thirty days: suspension of new deposits and new authorizations from publication; deactivation of websites, apps and all advertising and sponsorship signage; proof of liquidity and delivery of bettor lists to financial institutions and to the Secretariat of Prizes and Betting (SPA); refund of balances to bettors; and, finally, the termination of the authorizations.

Non-compliance is subject to a substantial daily fine, in addition to the penalties already provided for in Law No. 14,790/2023.

What does not end in October

There is a view going around that shutting down operations also ends the company's obligations. That is not the case. The MP preserves, for a multi-year period, duties to retain data and records, reporting obligations to the SPA's systems, tax obligations, anti-money-laundering duties and the regulator's supervisory authority over events that occurred while the authorization was in force.

The operational consequence is straightforward: fully dismantling the compliance, technology and legal structure is a mistake. A minimum capacity must be maintained to meet these obligations and, as discussed below, to support any future compensation claim.

Complying under protest is not acquiescing

Our advice has been to comply fully with the MP, with an express reservation of rights.

There is no contradiction in this. Non-compliance triggers daily fines, sanctions exposure and, once the authorizations are terminated, the risk of being treated as illegal operation — with no gain whatsoever in the underlying dispute. Compliance, on the other hand, does not imply agreement: a formal reservation in each act preserves the company's legal position and, as to pending sanctioning proceedings, the MP itself provides favorable effects for compliance.

A company that fails to comply loses on both boards. One that complies under protest keeps the second.

Where the real legal debate lies

Two claims that are often treated as one need to be separated.

Overturning the prohibition. This is the harder one. Brazil's Supreme Federal Court (STF) recognizes that lawmakers have broad latitude to regulate, restrict or prohibit gaming and betting. Building a strategy solely on the expectation of a full reversal means taking on high risk.

Recovering what was paid and invested. Here the outlook is substantially better, and this is where we believe the core of the debate lies.

The MP terminates the authorizations without refunding the authorization fee and without compensation. These were onerous, fixed-term authorizations acquired for significant amounts, paid for a period that will not be enjoyed. The point is not whether the State may lawfully decide to prohibit — it is that a lawful act imposing abnormal and specific harm on a defined group gives rise to State liability; otherwise, society as a whole would benefit at the expense of a few. Added to this are the prohibition of unjust enrichment, the protection of the legitimate expectations of those who adapted to a newly created regulatory framework, and the analogy with early-termination regimes under concession legislation, which require prior compensation.

There are also relevant questions regarding the substantive limits of provisional measures, the proportionality of the deadlines and, for operators licensed by state lotteries, the division of powers between the federal government and the states — an issue on which the STF has already ruled.

It should be noted that judgments against the federal government are paid through the precatório system (court-ordered public debt payments). It is a real path, but not a fast one.

Lapse of the MP does not automatically restore anything

This was by far the most frequent question in conversations at the event: if the MP is not converted into law, will the authorizations become valid again?

That is not how the Constitution works. If a provisional measure is rejected or lapses,

Congress must regulate, by legislative decree, the legal relationships established while it was in force; if no such decree is issued within the constitutional deadline, those relationships remain governed by the provisional measure itself.

Since the termination of the authorizations takes effect while the MP is in force, it is likely to stand even if the MP fails in Congress. A return to the market would depend on a legislative decree expressly addressing that restoration, a court decision preserving the authorization, or a new authorization under a new regime.

That is why action in Congress and action in the courts are not alternatives to choose between. They are parallel fronts, both with a short window. And there is a third, discussed next, that runs at the same time and tends to be underestimated.

The three fronts: legislative, judicial and corporate

The response to a scenario like this cannot be organized around a single front. There are three, running simultaneously, each with its own logic and counterparts.

Legislative monitoring. The MP's progress through Congress, the amendments filed, engagement with the rapporteur and committees, and ongoing analysis of the text that may result from conversion — including how it treats relationships established while it was in force, which is the point of greatest economic impact for those who have already paid for their authorization.

Judicial monitoring. Tracking the constitutional challenges already pending and the filings by industry associations, assessing participation through a legitimate entity, and deciding on individual legal action — which, to preserve the authorization, is only useful within the window before termination.

Corporate support. This is the least discussed front and, day to day, the one that demands the most decisions. Contracts with suppliers, platforms, payment providers, affiliates and sponsored parties must be reviewed one by one: what to suspend, what to terminate, with what wording, and with what effect on penalties and on proof of damages. Employment relationships require their own planning, because large-scale workforce reductions are subject to specific requirements, and mistakes here create liabilities that outlive the end of operations. On top of this come the corporate, tax and compliance obligations that remain in force after the authorization is terminated, the governance of decisions made during this period and a documented record of everything.

The first two fronts address the future of the authorization. The third determines the condition in which the company gets there — and, should the compensation claim succeed, it is the front that will have produced the evidence supporting it.

Evidence: what is lost now cannot be recovered later

Any refund or compensation claim will be decided on documents. And the time to produce them is now, while the operation still exists and the people who know it are still with the company.

This means organizing, with verifiable dates: proof and amount of the authorization fee, with the start date of the term; investments made to comply with the regulatory framework, with invoices and contracts; accounting records and financial statements for the period; current contracts and the costs of interrupting them; operating data and revenue metrics; and a record of every act performed in compliance with the MP, with the corresponding reservations.

One specific point that has gone largely unnoticed: how contracts are terminated affects compensation. Communications that attribute the shutdown to the company's own commercial decision, or that suggest the exit was convenient, may undermine the causal link between the State's act and the harm. For strategic contracts, suspension is usually preferable to termination. The wording of these notices deserves the same attention as a court filing.

Two profiles, two strategies

A company that intends to remain in the Brazilian market must preserve its path back: an administrative request to the regulator, support for the constitutional challenge through a legitimate entity, timely individual legal action, maintenance of a minimum structure, and a preference for suspending rather than terminating contracts.

A company that has decided to exit Brazil has a different agenda, but not a simpler one: an orderly, documented wind-down; compliance with the obligations that survive termination; careful handling of contractual and employment relationships — collective dismissals have their own requirements — and, even so, full preservation of the right to a refund and compensation, which is not lost by leaving the market, provided the evidence exists.

In either case, the decision must be made knowing that it is, to a large extent, irreversible within this timeline.

Conclusion

The sector was regulated, charged for it, and is now being prohibited. Whatever one's view of the merits of this policy decision, it produces concrete legal effects that must be addressed in weeks, not months.

In short: comply fully with the MP, always with an express reservation of rights; preserve evidence now, in an organized and dated way; and act simultaneously on the legislative and judicial fronts, respecting the deadline by which any measure aimed at preserving the authorization can still be effective.

Daniel Fernandes

Partner, Brasil Fernandes Advogados — OAB/SC 35.008

Brasil Fernandes Advogados practices in regulated digital entertainment and is monitoring the legislative progress of MP No. 1,394/2026 and the pending court proceedings. This article is for information purposes only, reflects the situation as of its publication date and does not constitute legal advice on any specific matter.