Online gambling addiction in Brazil: $3.7 billion spent in one month without social barriers, claims ‘worse than crack’

(from San Pablo) The online betting market has become a social emergency in Brazil. The central bank gave alarm voice last week, revealing in a statement that Brazilians spent 20,080 million reais ($3,695 million) in August alone.. Of that figure, 3,000 million reais ($552.1 million) were burned by 5 million of the 20.7 million recipients of Bolsa Familia, the government’s monthly food security subsidy for the poorest. So 21% of the total amount subsidized by the Brazilian state, which in August was 14.1 billion reais, 2.955 million dollars.

Since the beginning of the year, the most vulnerable segments of the population have spent 10,510 million reais ($1,934.2 million) on online gambling using a subsidized payment card. Additionally, there are increasing reports of teenagers turning to loan sharks for online gambling debts. Roberto Campos Neto, president of Brazil’s central bank, said the figures “are quite worrying”. What emerges in reality is a picture of an increasingly widespread addiction to gambling, which affects everyone really, but it is also a warning of very serious economic consequences, such as a possible increase in the insolvency of citizens and therefore more poverty. For this reason, Isaac Sidney, president of the Brazilian Federation of Banks (Febrapan), in recent days asked to disable online betting payments with pixa fast payment method that is popular among punters.

Fintech Klavi’s survey of a sample of 5,000 bank clients showed that over the past 12 months, 30% took out loans and allocated most of the amount to online betting. To stop this influx of money spent on compulsive gambling, the National Confederation of Trade in Goods, Services and Tourism (CNC) require before the Federal Supreme Court (STF) challenging the constitutionality of Law 14,790, which regulates online gaming and betting. In Brazil, the sector was authorized in 2018 under former President Michel Temer of the Brazilian Democratic Movement (MDB), but its regulation was not discussed until the second half of 2023, when Lula ratified Law 14,790 last December. On November 11, STF judge Luiz Fux called a special session to discuss the matter, while the Superior Electoral Court (STE) banned betting in the upcoming municipal elections on October 6.

This follows from a study by the consulting company KPMG Strategy & Innovation, The online betting sector in Brazil was between 60,000 and 100,000 million reais ($11,042 and $18,403 million) in 2023, compared to 5,000 million reais ($920 million) in 2018. By 2024, the market projections are between 90,000 and 130,000 million reais ($16,563 and $23,924 million), with an increase of more than 89% between 2020 and 2024. If, on average, each of the 212.6 million Brazilians spend their 0 .7% of the family budget, they are forced to cut further consumption in order to play, according to this study. Research by the National Confederation of Retail Executives revealed that 46% of gamers have given up spending primarily on clothing and services such as travel and restaurants. 15% even stopped paying their bills. The impact is also visible in the education sector, as research by the analytics company Educa Insights has shown. 35% of potential students interested in starting a career in 2024 did not do so because they devoted their income to online betting platforms and virtual casinos.

Several factors explain the growing popularity of this phenomenon. Brazilians’ passion for football – most bets are allocated to this sector – and the fact that some mobile phones already have online gaming applications installed at the time of sale in stores. Besides, It is the game itself that is addictive. For psychologist Juliana Bizet: “If gambling were a drug, it is comparable to crack.” Its addictive power is greater than, for example, cocaine. The shorter the interval between the bet and the result, the greater the risk of coercion. To make matters worse, people can bet themselves. The lack of social control causes more damage.” The Minister of Health, Nísia Trindade, stated in recent days that it is a authentic “pandemic” and that the country must treat it as a “smoking addiction”. His ministry will meet this week to develop new strategies.

However, according to Folha de São Paulo, the government organized only five meetings with health-related groups during the development of rules to regulate the sector, while 251 meetings were held with online betting companies. Rodrigo Machado, a psychiatrist from the Impulse Disorders Program of the Hospital das Clínicas (HC) Psychiatric Institute, warned in the University of São Paulo (USP) journal that the online betting market could wreak havoc on Brazilian public health. “We understand that this new measure can bring potential financial benefits to the country. But for this to happen, we need to be prepared and structured with an appropriate action plan on how to provide healthcare to this population and how to train professionals to handle these new patients,” he said. According to the psychiatrist, one of the critical points is the lack of national training, because in Brazil the level of health care, such as Basic Health Units (UBS) and Psychosocial Assistance Centers (Caps), is not sufficiently prepared for the treatment of gambling. addiction Hospital das Clínicas in São Paulo cares for an average of 150 new patients per year. Young people under 30 now represent more than a third (36.3%) of treated patients. However, these numbers are small compared to the number of people suffering from gambling addiction.

It adds to this scenario the huge risk that the entire online gaming sector supports the strengthening of organized crime in the country by laundering money from the drug trade that the sector enables. As Celso Ming writes in the O Estado de São Paulo newspaper, “there are no reliable statistics on how much gambling supports these illegal activities. However, there are sufficiently alarming data and indications that they are taking on important dimensions. Singer Gusttavo Lima, 25% owner of an online bookmaker, has been accused of money laundering and colluding with criminals. There are also increasing reports that criminal organizations such as Comando Vermelho (CV) and Primeiro Comando de la Capital (PCC) are using gambling to launder drug money and finance their activities. Ming also points out a contradiction in his article. “The betting regulation was passed more to satisfy the Lula government’s hunger for income than to organize the segment.” One of the most used arguments to justify the new law was that it would help raise revenue by at least 3 billion reais a year ($553 million). Now the expected effects of money laundering include tax evasion.

For Economy Minister Fernando Haddad, the goal is to regulate betting “Treat Games Like Cigarettes”. He also stated that “tax incentives are not given to gambling” and that “taxation is part of this government strategy”. However, according to economists’ estimates, taxing the sector could contribute 2,000 to 10,000 million reais (between $368 and 1,840 million) to the state coffers next year, a negligible figure compared to the 2,000 million reais (between $3,840 million). ) next year 7 billion reais (half a billion dollars) of total primary income this year estimated by the Brazilian government.

Haddad also said this week his ministry will work with President Lula on a package of measures against sports betting addiction that will include financial education courses. In addition, Social Development Minister Wellington Dias of the Workers’ Party, Lula’s PT, said the government is also studying blocking the Bolsa Familia credit card if the holder uses the money to place bets.

In a reverse process from the rest of the world, big Las Vegas casinos like Caesars Palace will also soon start operating in Brazil, first in the online betting sector and then possibly in brick-and-mortar casinos. actually Congress again considered House Bill 2,234 of 2022, which regulates gambling, horse racing and casinos. This is the senate version of Bill No. 442, which was approved by the Chamber of Deputies in February 2022 after deliberations since 1991. The rapporteur of the bill is Senator Irajá Abreu from the Social Democratic Party (PSD), according to which the current public debate on online betting will not interfere until the approval of this proposal, which will probably be voted on after the municipal elections. One of the points of criticism of the amended text in the Senate is the replacement of the term “casinos built” with the term “casinos installed”, a replacement that will allow existing hotels and tourist complexes to build casinos in them, thereby accelerating the supply, which can further increase the risk of addiction.