Brazilian banks wary of rapid rate hikes
Date: 2024-09-20 Author: Leon Pierce Categories: SPORTS BETTING
Brazilian sports fans continue to bet heavily, especially ahead of the launch of a regulated gambling market in January. This has attracted a number of international operators looking to invest in the country. However, experts worry that such high interest in betting could divert funds from other sectors of the economy.
Rising betting costs raise concerns
According to Reuters, Brazil’s financial sector is closely monitoring the situation. Legalized betting is expected to generate significant tax revenues, which will have a positive impact on the economy. Gambling companies are expected to contribute around US$620 million to the budget through licensing.
Despite this, many are wary of the long-term impact of the sector’s boom. Economists point to a decline in consumer spending in the country, which they attribute in part to the rise in gambling. According to the future head of the Central Bank of Brazil, Gabriel Gallipolo, many financial institutions are confident that the outflow of funds into bets has an impact on the economic situation.
For example, in the past financial year, which ended in June, Brazilians spent about 12.2 billion US dollars on bets.
Representatives of the gambling industry, in turn, refute these claims. According to lawyer Luis Felipe Maia, who represents the interests of many local gambling companies, the decline in consumer spending is due to the effects of the COVID-19 pandemic, and not to the increase in bets.
Negative impact on society
In addition to economic issues, concerns are growing about possible social consequences. For example, Reuters spoke with Diego, a worker from Sao Paulo who faced a problem with gambling addiction. Diego began betting after his first big wins, but soon found himself in debt and lost most of his savings.
Diego's story is not unique. Surveys show that many Brazilians spend money on gambling that they would normally spend on other things. In 2021, Brazilian families spent 63% of their income on food, cosmetics, electronics, and medicine, but in 2022, this share dropped to 57%.
In recent years, the share of household spending on gambling has doubled to 1.9%. In 2023, 38% of the entertainment budget was spent on betting, according to research by Stratregy&. Particularly worrying is the fact that 79% of gamblers are low-income people, many of whom are already struggling to pay off their credit cards, according to the Locomotiva Institute.
Despite these concerns, operators’ interest in Brazil has not waned. Following a recent warning from the Ministry of Finance, six more betting companies have applied for licenses.
