Brazil is experiencing a surge in online gambling activities using its instant payment system Pix, with related transactions increasing by over 200% since January 2024. According to local reports, the Central Bank of Brazil has viewed this surge as a potential warning sign of declining credit quality, especially among low-income groups, including beneficiaries of the "Bolsa Família" program.Gambling activities' rapid growth has raised concerns about increasing personal debt and rising default risks, particularly among vulnerable groups.
The Central Bank of Brazil has explicitly pointed out a close connection between the growth in online gambling and beneficiaries of the "Bolsa Família" program. The average transaction amount has significantly increased, intensifying concerns about long-term financial instability. Many low-income groups are attracted by the prospect of quickly acquiring wealth through gambling, potentially facing increasingly severe debt issues.
Economic Impact and Inflation Concerns
In addition to concerns about the rising trend in gambling, the Central Bank of Brazil is also closely monitoring the country's economic trajectory. Inflation remains a significant challenge, and economic growth exceeding expectations along with low unemployment rates make this issue even more complicated. While these factors are generally positive indicators, they have driven inflationary pressures, deviating from the Central Bank's target.
Currently, Brazil's economic expansion is slightly above its potential, and the Central Bank predicts that government spending will slow down due to new fiscal rules. However, this has not fully alleviated concerns about fiscal transparency, as recent increases in risk premiums reflect uncertainties about data transparency rather than actual spending growth.
Central Bank's Insights into the Gambling Market
Last week, the Central Bank released an in-depth report on Brazil's online gambling industry, aimed at assessing the market's size and scope. This study, commissioned by Senator Omar Aziz, revealed challenges in tracking the gambling industry, as many companies operate under vague or misclassified names. This lack of transparency makes it difficult to assess the industry's full extent.
In August 2024, Brazil's online gambling industry transferred nearly 21 billion reais (345 million euros) to gambling companies, showing its rapid expansion. However, many companies are still not listed in official economic sectors, adding complexity to regulatory efforts. The study estimates that about 15% of bets are retained by gambling platforms, with the remainder distributed as prizes to bettors.
Profile of Bettors
The Central Bank's report also provided insights into the demographics of Brazilian bettors. Many participants are aged between 20 and 30 years, with about 24 million people involved in online gambling during the analysis period. Data from August 2024 shows that 17% of "Bolsa Família" beneficiaries participated in gambling activities. The average monthly betting amount varies significantly depending on age, ranging from 100 reais (16.44 euros) to over 3000 reais (493.48 euros).
