Brazil’s Social Development Ministry announced that it will introduce measures to prevent the misuse of social benefit payments for online gambling. A working group is expected to present recommendations next week to curb this practice, which has raised concerns within the government, Reuters news report said.
Brazil is the third-largest online betting market in the world as demand for sports betting in soaring in the Latin American nation. More than 2,000 betting companies operate in Brazil, generating between R$60-100 billion ($10.7-17.9 billion) in 2023.
Top three betting companies in Brazil are Bet365, Betano, and Betfair – in terms of traffic to their gambling websites. Online betting platforms offer both sports betting and online casino games. Betano sponsors the Brazilian Football Championship and Atletico Mineiro.
Brazil recently introduced regulations to control the online betting industry’s growth and generate revenue. Betting companies need to pay a R$30 million ($5.4 million) license fee to operate for five years starting in 2025.
Use of social benefit
The government’s Bolsa Familia program, which provides direct cash transfers to Brazil’s poorest households for over 20 years, has come under scrutiny after a central bank report revealed that 5 million people from beneficiary families spent a total of 3 billion reais ($31.04 billion) on online gambling in August. The Pix payment platform was primarily used for these transactions, with an expenditure of 100 reais per person. This equates to roughly 20 percent of the program’s monthly budget being spent on gambling activities.
Bolsa Familia, a key social welfare program under President Luiz Inacio Lula da Silva’s administration, currently supports 21 million families with an average monthly payment of 685 reais. The total annual cost of the program stands at 168.6 billion reais, equivalent to 1.5 percent of Brazil’s GDP.
Social Development Minister Wellington Dias emphasized the need for stricter controls, stating that one proposal under consideration is to impose a “zero limit” on the use of social benefits for gambling. The government is exploring mechanisms to enforce these rules using tax ID numbers. A formal proposal is expected to be submitted to President Lula.
Central bank chief Roberto Campos Neto said earlier that the report was not meant to criticize the program but to raise awareness of the potential financial risks lower-income households face due to excessive spending on online gambling.
Baburajan Kizhakedath
