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President of Febraban warns about the risk of using credit cards for betting and virtual casinos, highlighting that the increase in defaults could raise interest rates.
In recent years, sports betting and electronic betting, known as bets, have become a real 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 the immediate ban on the use of credit cards as a form of payment for bets and virtual casino platforms, such as the tiger game.
Why ban the use of credit cards in betting?
During an event with journalists, Sidney made a clear appeal to federal government: prohibit the use of credit cards for payments on betting platforms. The main argument of the president of Febraban is that this payment method has the potential to seriously compromise account holders' finances and increase default rates in the country.
Sidney stated: “The government should use all legal means to immediately prohibit the use of credit cards for gambling. The use of this product is already affecting household consumption and increasing defaults.”
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He also revealed that he has already discussed the matter directly with the President Luiz Inácio Lula da Silva and with the Minister of Finance, Fernando Haddad. According to Sidney, the growth of sports betting may have a direct impact on the increase in interest rates for granting credit, since default tends to increase with the debt caused by betting.
Febraban's position and the current betting scenario for the Tigers' game
Despite Sidney's strong position, Febraban released 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 its associated banks. Even so, the topic is gaining more and more relevance in the Brazilian financial scenario.
Since April of this year, the Ministry of Finance had already taken measures to regulate electronic betting, determining that payments can 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 betting will be implemented.
The use of credit cards for betting will remain permitted until then, which, in Sidney's view, is worrying, given the impact that this practice can have on the budget of Brazilian families.
Growth in betting and debt risks
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 have placed some type of bet online. This growth, however, is far from positive for the personal finances of many players.
According to a survey by the Locomotiva Institute, 86% of gamblers in Brazil have some type of debt, and 64% have a negative credit rating. This shows that gambling 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 debt.
For many families, especially in classes D and E, Betting already represents a considerable portion of the budget. A study by PwC showed that, in these social classes, 1,38% of household income is being spent on betting. This number is five times higher than that recorded 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 gambling are not just financial. Gambling addiction, especially online gambling, can have serious consequences. psychological consequences for players. The feeling of winning, even if rare, releases dopamine in the brain, activating the reward system and leading the gambler to incessantly seek this feeling of pleasure. Over time, this can turn into compulsive behavior, in which the gambler continues to bet even in the face of significant financial losses.
For banks, this reality presents an additional challenge. Febraban is already studying how the growth of bets can impact household over-indebtedness and, consequently, the increase in defaults in the financial system. In the long term, this may result in higher interest rates for granting credit., as the risks of non-payment increase.
How a credit card ban can help
Banning the use of credit cards in electronic betting, including those involving the popular Tiger Game, could be an effective measure to reduce the financial and psychological impact caused by this practice. By limiting payment methods to options such as Pix, transfer or debit, the government can help prevent players from spending money they do not have, which in turn can reduce cases of default.
Although it is not yet a reality, Sidney's defense for bringing forward 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 go into debt and that the betting market will be a little more regulated.
