Brazil online gaming ban: Allwyn withdraws FY26 margin guidance
CITI’S TAKE
Allwyn has withdrawn its c.37% FY26 Adjusted EBITDA margin guidance following Brazil’s provisional ban on online sports betting and iGaming. Betano contributes c.13% of our FY26e Adjusted EBITDA, with Brazil representing 40-45% of Betano’s revenues (our estimates). The key near-term concern is Betano’s fixed-cost base, as certain costs cannot be reduced quickly. We estimate a negative EBITDA impact of at least 10% of adj. EBITDA in 4Q26e/3% in FY26. The measure has legal effect for up to 120 days, plus any periods when Brazil’s Congress is in recess, potentially extending it to early March 2027. It will lapse if rejected by either house or not approved by both within this period. Betano is assessing cost mitigants and preparing legal action, while the longer-term impact will depend on the congressional process and pace of cost reductions. Brazil’s presidential election on 4 October adds uncertainty to the congressional process/regulatory outlook.
Valuation
We value Allwyn on 2027e SOTP applying 9x EV/Adj. EBITDA to PrizePicks, 10x to Betano, 7.5x to other segments. Our EUR13.3 TP implies c.8x Adj. EBITDA/9x Op.EBITDA in 2027e.
Risks
Key risks to our target price include:
Upside risks: Rerating of key peers; value-accretive acquisitions; favorable terms of exclusive licences; operator-friendly sports betting results;stronger economic growth.
Downside risks: Regulatory risks; Risks of potential loss of licences or exclusive rights; Higher taxation; Higher Competition (prediction markets, OSB platforms, DFS platforms in the US), macro risks in key markets (EU, UK, US), customer-friendly sports betting results, further minority shareholder dilution due to scrip dividend option or shares issuance related to potential M&As.
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