Online betting is becoming an integral part of daily life for Brazilians. Initially, this rapid growth was driven by sports betting, particularly due to the popularity of sports in the country. However, the so-called 'Bets' market has not stopped there. Online betting now encompasses a diverse range of activities, extending beyond sports competitions to even attempts at creating betting markets for electoral outcomes.
Despite the popularity that online gambling has gained in Brazil in recent years, the number of bettors and the amounts involved remain surprising. According to a Central Bank study, in the first eight months of 2024, Brazilians spent between R$18 billion (US$3.1bn) and R$21 billion (US$3.6bn) per month on online betting, with approximately 24 million people placing at least one bet during this period via the Pix payment system.
The age range of bettors is quite broad, with a focus on young adults between 20 and 30 years old. Data from August 2024 reveals that average monthly transfer amounts increase with age: younger bettors spend around R$100 (US$17) per month, while older bettors exceed R$3,000 monthly (US$515). Alarmingly, in August 2024, about 5 million people from Bolsa Família beneficiary households transferred R$3 billion (US$515m) to betting companies via Pix.
Although credit card use for online betting is less common than Pix, it has also drawn attention from the market and regulators due to the risk of debt accumulation. When betting with credit, players can easily exceed their limits, accruing debts that become difficult to repay, especially with high credit card interest rates.
Given this scenario, Brazilian regulatory authorities have expressed justified concern about the growth of online betting in the country. This phenomenon could lead to negative economic and social impacts, such as the diversion of resources previously allocated to consumption, increased indebtedness among vulnerable population groups, and public health risks associated with excessive use of betting platforms.
As an initial response, the Ministry of Finance determined that credit card use for online betting would be prohibited starting January 1, 2025. However, the Brazilian Association of Credit Card and Services Companies (Abecs) argued that credit usage for betting is relatively limited and anticipated the measure by implementing the ban on October 2, 2024.
Nonetheless, the effectiveness of banning credit cards for online betting remains uncertain in addressing the problems associated with this market's growth. As noted in the Central Bank of Brazil study mentioned above, Pix is the primary channel for online betting transactions. Since credit represents only a small portion of the sector’s transactions, it is unclear how much the measure will help curb excessive indebtedness or control betting volume.
Therefore, the ban on the use of credit cards for online betting may have a limited impact on mitigating the population's debt. Bettors can still resort to other financing methods, such as Pix Crédito, which offers the possibility of payment through the instant payment system, using the credit card limit to pay for transactions in installments, functioning as an indirect credit that can finance bets. Due to the ease of use and wide acceptance of Pix in Brazil, there has been discussion about the possibility of limiting or even prohibiting the use of Pix and Pix Crédito for betting in the country.
Pix was developed by the Central Bank with the aim of filling a series of gaps in the basket of payment instruments currently available to the population. As pointed out by the Center for Advanced Studies on the Regulation of the National Financial System (NEASF) at FGV Direito Rio, Pix is the result of a history of advances in the Brazilian payment system, which began with the development of the Brazilian Payment System (SPB) and the Reserve Transfer System (STR).
This payment method quickly became essential in the daily lives of Brazilians. By September of this year, almost 800 million keys had been registered, with more than 760 million individual accounts. In September alone, transactions via Pix exceeded R$2.4 billion (US$412bn)[4]. This practical and accessible payment method has been the main channel for placing bets in the so-called 'Bets'.
The debate over whether to ban Pix for online betting has been dividing opinions among important market entities. Some of these institutions believe that an immediate ban or, if this is not feasible, limiting Pix for betting could have a positive impact. Others, however, argue that the regulatory focus should be on the betting activity itself and not on the payment methods used.
The Central Bank, in turn, has implemented stricter regulations regarding Pix in recent months. To combat the increase in fraud and scams, the BCB established a limit of R$200 (US$35) for transfers made by new devices, with a daily limit of R$1,000 (US$171). Transactions over R$200 may only be made by devices that have already been registered by users, thus increasing the security of transactions.
However, it is important to ask whether banning Pix would not be just a superficial solution, incapable of solving the problems related to online betting. Understanding whether the sharp growth in "bets" in recent years is a result of the facilities provided by Pix or whether it is part of a broader trend in consumer behavior is a challenge that must be faced with caution.
If the sharp increase in betting is a broader trend in player behavior, the ban on Pix may not have the desired impact. Bettors can easily migrate to other payment methods, such as debit cards and prepaid cards, while continuing to place their bets.
In addition, the ban on the use of Pix in betting, as well as the implementation of other regulatory barriers, must be carefully evaluated to ensure that the Central Bank's digital agenda is preserved. This agenda aims to make payment methods more accessible and affordable, promoting financial inclusion and facilitating transactions between users. Restrictions that limit the diversity of payment options must be carefully evaluated to ensure that the advances achieved are not compromised.
It is undeniable that the increase in the number of bettors and the significant volumes moved in betting are alarming. The potential negative impacts on the economy and society need to be considered when formulating effective regulation. However, this regulation must be drafted with caution, ensuring that the objective of mitigating the harm associated with online gambling is achieved without compromising the advances made in payment methods.
Gabriela Borges
Ph.D. and Master in Regulation Law from FGV Direito Rio. LL.M. in Law & Economics from George Mason University. Postgraduate in Corporate and Capital Markets Law from FGV Direito Rio. Professor at FGV Direito Rio and Coordinator of the Advanced Studies Center on Financial System Regulation (NEASF/FGV Direito Rio).
Gustavo de Santana
Bachelor of Law at FGV Direito Rio. Researcher at the Advanced Studies Center on Financial System Regulation (NEASF/FGV Direito Rio).
