Brazilian Banks: Consumer Spending Cuts Could Be Due to Rise in Online Sports Betting | PYMNTS.com

Online sports betting reportedly may be contributing to consumer spending growing slower than expected in Brazil.

Some banks and think tanks are making that connection at a time when online sports betting has become a “craze” in Brazil, Reuters reported Friday (Sept. 20).

Brazil has become one of the world’s top six betting markets, according to the report.

When the government began requiring online sports betting firms to register, it received 113 registration requests, per the report.

In the time since online sports betting began in Brazil in 2018, the portion of family spending devoted to gambling doubled to 1.9%, and the share of household entertainment budgets spent on betting rose from 10% to 38%, the report said, citing figures from Santander and the PwC consultancy Strategy&, respectively.

At the same time, the share of household spending going to food, clothing, electronics, beauty products and medicine dropped to 57%, a figure that was down from its peak of 63% in 2021, the report said, citing Santander data.

Brazilian central bank governor-in-waiting Gabriel Galipolo said in August, per the report: “Even major banks are discussing why the recent growth in income is not reflected in the growth of savings or consumption and may be leaking into this type of activity, into gambling.”

The gambling industry disputes claims that betting has impacted spending on consumption, according to the report.

A lawyer who represents a dozen gambling companies in Brazil, Luiz Felipe Maia, said in the report: “The retail sector is using gambling as a scapegoat.”

It was reported Tuesday (Sept. 17) that Brazil is tightening its online gambling rules.

The country’s Finance Ministry plans to bar companies from offering credit to gamble on their websites; prohibit consumers from using credit cards to place bets; and prevent online gambling companies from operating in Brazil if they haven’t requested authorization to do so.

Finance Minister Fernando Haddad said gambling-related financial problems have become an “epidemic” in Brazil.

Sports betting has also drawn the attention of legislators in the United States, where lawmakers introduced a bill Sept. 12 that would require states that allow sports betting to meet minimum federal standards covering advertising, affordability and artificial intelligence.