Brazilian Retail: Pressured Macro Scenario and Affordability Concerns to Play a Role in 2H26E. 2Q Preview Inside.

Research evidence excerpt

Brazilian Retail: Pressured Macro Scenario and Affordability Concerns to Play a Role in 2H26E. 2Q Preview Inside.

Joseph Giordano AC Latin America Equity Research

(55-11) 4950-3020 31 July 2026 J P M O R G A N

joseph.giordano@jpmorgan.com

according to surveys, there is an informal/unlicensed market in parallel that adds pressure

to disposable income as well.

Figure 1: Total Formal Gross Gaming Revenue Figure 2: Registered GGR as % of wage mass

(GGR) %

R$ billion

68.3 75.2 1.8%

57.9 1.6%

1.4%

39.9 1.2%

31.7 1.0%

22.6 45% 0.8% 17.6 18.2

26% 18% 10% 0.6%

26% 4% 24% 40% 0.4%

0.2%

2019 2020 2021 2022 2023 2024 2025 2026E 0.0%

GGR Y/Y 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026E

Source: H2GC, J.P. Morgan. Obs: GGR includes online/offline Lottery, Source: H2GC, J.P. Morgan. Obs: GGR includes online/offline Lottery,

Gaming and Betting for onshore and offshore. Obs: Historical data Gaming and Betting for onshore and offshore. 2026E Wage mass

comes from H2GC while ’26E data reflects JPM estimates. estimate based on the 2025 print and YTD growth. ’26E GGR reflects

JPM estimates.

• We estimate regulated GGR could represent ~5% of disposable income in ’26E.

Likely not relevant in the aggregate… We ran a rough calculation to gauge how much

of a headwind this would represent to disposable income available for retail, subtracting

debt obligations, housing and healthcare from the total wage mass. Overall, we conclude

that (1) our proxy for disposable income points to 2-3% real growth this year, while (2)

betting GGR could represent ~5% of “disposable” income. In terms of headwinds, we

calculate that the estimated increase in GGR this year could offset ~6% of the disposable

income growth, while in 2025 the offset was ~10%. Having said this, considering the