Brazil struggles with a mounting online betting crisis as the government rushes to impose tougher rules amid fears of rising household debt and addiction, according to bne IntelliNews.
The executive announced that it would ban the use of credit cards for online betting as early as October. Such transactions reportedly account for only 3 per cent of the total volume. Major players in the industry plan to block credit card payments from 1 October.
A Finance Ministry regulation originally envisaged the ban in January 2025, when full market regulation was due to come into effect. A central bank study found that this year Brazilians transferred a staggering 20 billion Brazilian reais ($3.7 billion) a month to online betting and casino platforms through the popular instant payment app Pix alone.
In response, Central Bank President Roberto Campos expressed concern about the impact of the games on household debt. An estimated five million Bolsa FamÃlia beneficiaries transferred about BRL3bn ($551m) to betting firms via Pix in August.
The data sowed panic among officials as they prepared for the rules to come into effect in January 2025. If current betting volumes continue, Pix’s annual spending could reach 240 billion Brazilian reais ($44 billion) in 2024.
Online betting has been legal in the country since 2018, with the phenomenon steadily growing, fuelled by aggressive advertising on TV and social media.
Combating gambling addiction
Finance Minister Fernando Haddad suggested “treating games like cigarettes,” while inistry Executive Secretary Dario Durigan called the problem a “huge scourge.”
Gambling, as a whole, is always a reason for loss, because the bank always wins. There must be awareness that it can be a leisure option, but gambling has to be responsible, it has to be done with care, whether for mental health or debt.
Meanwhile, the National Confederation of Commerce asked the Supreme Federal Court to declare the sports betting law authorised by President Lula da Silva last December unconstitutional.
The new rules require companies to identify and classify gambling risks, report suspicious transactions to the Financial Activities Control Board, conduct advertising campaigns on the risk of addiction and limit betting.
In another sign of the gravity of the situation, a study by financial technology firm Klavi found that about 30 per cent of bank account holders had applied for a loan to finance gambling in the past year, according to Estadao.
Fighting the rise of online betting is not just a national issue. This is a litmus test of how governments can adapt and regulate the ever-changing and stressful landscape of digital entertainment and finance.
