Brazilian Banks Are Wary of the Rapid Rise of Betting
Brazil sports fans continue to bet hard as the country prepares to launch regulated betting in January. While this trend has attracted a lot of interest from international operators wishing to invest in Brazil, experts are concerned that it would divert funds from spending in other areas.
People Are Spending More on Gambling Than Before
Reuters reported that Brazilās financial sector is carefully following the situation. The introduction of regulated betting is expected to provide certain economic boosts through its tax contributions. Gambling companies are expected to inject an additional $620 million into the economy via license requests.
Yet, some are wary of the long-term effects of gambling. Reuters reported that the LATAM country has been experiencing a slowdown when it comes to consumer spending, which banks attributed to betting.
Gabriel Galipolo, Brazilās central bank governor-in-waiting, spoke with the news outlet on the matter, saying that many banks believe gambling ties into the financial changes in the country. Banks believe that money is leaking into gambling from other sectors, predisposing significant economic shifts.
For context, Brazilians have wagered an estimated $12.2 billion on betting platforms in the financial year ended June alone.
Gambling industry representatives, however, denied these claims, saying that the āretail sector is using gambling as a scapegoat.ā According to lawyer Luiz Felipe Maia who represents many local gambling firms, the decline in consumption is something that came with the COVID-19 pandemic.
Gambling Can Negatively Impact Public Health
In the meantime, some are wary of the negative impact gambling could have on Brazilian society. Reuters spoke with Diego, a factory worker from Sao Paulo who became addicted to wagering and slots.
Diego became hooked on gambling after making significant winnings at first. However, his momentum eventually dried up, leaving him indebted and miserable. Ā
Diegoās situation isnāt unique as customer surveys in Brazil suggest that many wager with funds they would normally spend on different goods or services. Households that spent 63% of their income on food, cosmetics, electronics and medicine in 2021, spent only 57% of their income on such commodities last year.
In the meantime, data shows that family spending on gambling has doubled since 2018, now standing at 1.9%. The betting sector took approximately 38% of peopleās entertainment budget in 2023, according to a study by Stratregy&.
Concerningly, 79% of bettors are from lower income backgrounds, with many already struggling to pay their credit card debt, according to Locomotiva Institute.
In the meantime, operators continue to express significant interest in Brazil. Following the Ministry of Financeās recent warning, six more sportsbooks have now applied for a license.
