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Febraban President Warns of The Risks of Using Credit Cards for Betting and Online Casinos, Highlighting That The Increase in Delinquency May Raise Interest Rates.
In recent years, sports and electronic betting, known as bets, have become a true craze in Brazil. Millions of Brazilians are diving into this world, attracted by the promise of easy and fast money. However, this explosion of betting has also brought a series of financial and social problems. Recently, the president of the Brazilian Federation of Banks (Febraban), Isaac Sidney, advocated for an immediate ban on the use of credit cards as a payment method for bets and virtual casino platforms, such as the tiger game.
Why Ban The Use of Credit Cards for Betting?
During an event with journalists, Sidney made a clear appeal to the federal government: ban the use of credit cards for payments on betting platforms. The main argument of the Febraban president is that this payment method has the potential to seriously compromise the finances of account holders and increase delinquency in the country.
Sidney stated, “The government should use all legal means to immediately ban the use of credit cards for gambling. The use of this product is already affecting household consumption and increasing delinquency.”
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He also revealed that he has already discussed the matter directly with President Luiz Inácio Lula da Silva and Finance Minister Fernando Haddad. According to Sidney, the growth of sports betting may have a direct impact on the increase in interest rates for granting credit, as delinquency tends to rise with the indebtedness caused by betting.
The Position of Febraban and The Current Scenario of Betting in The Tiger Game
Despite Sidney’s strong positioning, Febraban issued a statement clarifying that the opinion expressed by its president is personal, and that he does not officially speak on behalf of the federation or the associated banks. Even so, the topic is gaining increasing relevance in the Brazilian financial landscape.
Since April of this year, the Ministry of Finance had already taken measures to regulate electronic betting, determining that payments may only be made via Pix, bank transfer, or debit. This new rule, however, will only come into effect in January 2025, when the official regulation of bets will be implemented.
The use of credit cards for betting remains permitted until then, which, in Sidney’s view, is concerning given the impact that this practice can have on the budgets of Brazilian families.
Growth of Betting and The Risks of Indebtedness
The number of Brazilians venturing into sports and electronic betting, such as the tiger game and other types of virtual casinos, is only increasing. In 2024, it is estimated that around 25 million people in Brazil will have placed some type of online bet. This growth, however, is far from positive for the personal finances of many players.
According to a survey by the Locomotiva Institute, 86% of bettors in Brazil have some form of debt, and 64% have negative credit ratings. This demonstrates that betting is increasingly leading people into complicated financial situations. What starts as an attempt to make quick money ends up turning into a vicious cycle of indebtedness.
For many families, especially in classes D and E, betting already represents a significant portion of their budget. A study by PwC showed that in these social classes, 1.38% of household income is being directed toward bets. This figure is five times higher than reported five years ago, indicating that the economic impact of betting is growing rapidly.
The Role of Banks and The Psychological Consequences
The negative impacts of betting are not just financial. Gambling addiction, especially online, can have serious psychological consequences for players. The feeling of victory, even if rare, releases dopamine in the brain, activating the reward system and leading the bettor to incessantly seek that pleasurable sensation. Over time, this can transform into compulsive behavior, where the player continues betting even in the face of significant financial losses.
For banks, this reality presents an additional challenge. Febraban is already studying how the growth of betting may impact families’ over-indebtedness and, consequently, increased delinquency in the financial system. In the long run, this could reflect in higher interest rates for granting credit, as the risks of non-payment increase.
How The Ban on Credit Cards Can Help
The ban on the use of credit cards for electronic betting, including those with the popular tiger game, could be an effective measure to diminish the financial and psychological impact caused by this practice. By limiting payment methods to options such as Pix, bank transfer, or debit, the government can help prevent players from spending money they do not have, which, in turn, can reduce cases of delinquency.
Although it is not yet a reality, Sidney’s advocacy for the acceleration of this ban shows that there is a genuine concern to protect Brazilians from the negative impact of electronic betting. By banning the use of credit cards, the hope is that fewer people will end up in debt and that the betting market will be a bit more regulated.
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