Reports that the Brazilian Ministry of Finance's gambling regulations have backfired, intensifying gambling hell, and gamblers are being ruined by 1000% annual interest debt
Foreign media outlet Bloomberg reported that the legalization of gambling in Brazil and the institutionalization of online gambling, or 'iGaming,' has led to a worsening of pathological gambling addiction, which has become a social problem involving high-interest card loans, loan sharks, and revolving credit.
Brazil Welfare Checks Help Fuel Gambling Spree, Government Intervention - Bloomberg
In Brazil, where one in three people reportedly lives below the poverty line , gambling advertisements are rampant in the streets and on public transport, and influencers on social media are quick to tout their gambling success.
Legalization has made gambling much more accessible, making it attractive to struggling Brazilians, who are fuelling their desire to get rich quick by betting on local soccer teams or playing in virtual casinos.
Beatriz Azevedo dos Santos, who spoke to Bloomberg, is one of the Brazilians suffering from gambling addiction.
At the time of writing, Dos Santos, who is 19 years old, became addicted to gambling when he was 17 years old and tried out a virtual casino game called 'Crash.'
Dos Santos, who used to deliver pizza and burgers by bicycle and earn 500 reais (about 13,500 yen) a week, got lucky and quickly became addicted to online gambling, getting into debt that he could never repay.
'At that moment, I felt like I was in control of the game and that the outcome was up to me,' dos Santos says.
For years, gamblers like dos Santos had to make do with legal lottery tickets or sneakily gambling in underground bingo halls, but Brazil legalized gambling in 2018.
Additionally, the Brazilian government has introduced legislation in 2023 that includes the legalization of fixed-odds betting, i.e. betting with pre-determined odds, in relation to sports and online games such as esports.
The new regulations, which stipulate the fees for gambling operators to obtain licenses from the Brazilian Ministry of Finance and taxation on profits from betting businesses, were enacted in the hope of clarifying the system and increasing tax revenues. However, it has been pointed out that an unexpectedly large number of gambling operators entered the country, causing the online gambling market to expand rapidly, inadvertently causing an overheating of gambling problems.
According to research firm Instituto Locomotiva, the number of gamblers in Brazil has doubled to 52 million in the six months since the beginning of 2024. The Central Bank of Brazil also estimates that the gambling expenditures of Brazilians will be between 18 billion and 21 billion reals (approximately 486 billion to 567.5 billion yen) per month by August 2024.
Adding to the problem are Brazil's high interest rates. Brazil is notorious for high interest rates on loans and debts, with even large financial institutions charging 300% annual interest, and smaller banks charging as much as 1000% annual interest. A 1000% annual interest rate means that after one year, your debt will have ballooned to 11 times its original size.
In January 2024, Brazil's Central Bank
The central bank also reported in September 2024 that '20% of the funds the government disbursed in August for the low-income welfare program Bolsa Família had been spent on online gambling,' a figure that shocked Brazilian society.
In response to this situation, the Brazilian government has introduced stronger regulations, such as tightening the licensing of gambling operators and limiting the amount of bets. It is also considering banning the use of credit cards for gambling and prohibiting gambling operators from advertising gambling as an investment.
Dos Santos told Bloomberg how foolish her gambling addiction was and how she was led to believe it was a way out of poverty. 'Social media was telling me influencers were investing, not gambling, but now I know that was just a pipe dream,' she said.
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