Sports betting strains family budgets in classes D and E

Spending on online sports betting is impacting the consumption of goods and services, particularly among lower-income socio-economic classes. This trend is also affecting perceptions of economic improvement in Brazil, such as rising incomes, job growth, and inflation control.

This assessment was carried out by PwC Strategy& do Brasil Consultoria Empresarial Ltda, a branch of the global auditing and advisory firm PricewaterhouseCoopers. According to economist and lawyer Gerson Charchat, partner and leader at Strategy& do Brasil, spending on sports betting "is already surpassing other types of discretionary spending, such as leisure, culture, and personal products, and is even beginning to impact the food budget. This diversion of resources to betting places significant pressure on the demand for essential products, disrupting the overall dynamics of the economy."

Sports betting on online platforms soared in Brazil after the passage of Law No. 13.756, which was approved by the National Congress and signed into law by then-President Michel Temer in late 2018. From that time until 2023, spending on betting has increased by 419 percent.

"In 2018, gambling accounted for 0.27 percent of the family budget in classes D and E; today, that figure has surged to 1.98 percent, nearly four times higher than five years ago. Meanwhile, spending on leisure and culture has declined from 1.7 percent to 1.5 percent of the budget, and spending on food has remained stable," said Charchat in an interview with Agência Brasil.

He warns that sports betting has grown significantly and has become a significant source of spending, especially among young people from lower income social strata. "The phenomenon could even generate an increase in indebtedness among the low-income population, which could have a negative impact on the country's economic growth," he said.

An analysis published by Strategy& do Brasil, based on secondary data, reveals that the percentage of Brazilians perceiving financial difficulties increased by five percentage points between 2022 and 2024. Currently, a fifth of Brazilians report either struggling to pay their bills every month or being unable to pay them most of the time.

Bill No. 2.234/2022 is currently being processed in the Senate, having already been approved by the Constitution and Justice Committee (photo) - Lula Marques/ Agência Brasil

Reduced income

Precise data on the number of companies operating platforms in Brazil or the total amount of money raised in the sector is currently unavailable. These figures will only become clear once the companies receive authorization from the Ministry of Finance to operate fixed-odds lotteries and begin collecting taxes.

The Brazilian Society of Retail and Consumption (SBVC) had already highlighted the impacts and effects on the economy. An opinion poll conducted in May for the organization found that among those who gamble, 64 percent admit to using a portion of their primary income for betting, while 63 percent report having committed part of their income to online betting. Additionally, 23 percent have cut back on clothing purchases, 19 percent on market items, 14 percent on hygiene and beauty products, and 11 percent on healthcare and medications.

Risks

According to economist Ione Amorim, a consultant for the financial services program at the Institute for Consumer Protection (Idec), "the problem has escalated." She notes that, beyond the economic dimension, there are unaddressed issues related to regulatory failures, social effects, and impacts on the population's mental health.

"Today, we are witnessing a reality marked by suicides, home destruction, debt, and job losses as individuals exhaust all their resources. These severe mental health issues stem from addiction, often leading to a downward spiral: individuals who fall into debt might turn to gambling, then alcohol, followed by drugs, and ultimately, suicide," explains Ione Amorim, who has also lectured on the impacts of online gambling within the Armed Forces.

In the economist's view, the social situation and widespread misinformation exacerbate the vulnerability of lower-income individuals to betting risks.

"We have a population with low level of financial education. Many individuals already struggle to manage their finances and live within their means," noted Amorim.

She argues that the socio-economic conditions of some families drive them into debt to meet basic needs, making gambling an appealing option for potentially acquiring funds to cover their obligations.

However, Amorim cautions, "Easy winnings can lead to an environment with significant losses." The economist also highlights that betting is mediated by algorithmic systems.

"The individual is playing against a machine that is programmed to ensure long-term losses. While they might win occasionally, they are likely to lose far more overall," she explained.

Casinos

Ione Amorim warns that the economic, social, and mental health impacts of electronic sports betting on online platforms could be exacerbated by the approval of Bill No. 2.234/2022, which is currently before the Senate. This bill seeks to authorize the operation of casinos, bingos, “jogo do bicho”, and horse racing betting nationwide.

The approval of this bill, along with the law that authorized betting, is supported by the potential for these businesses to generate employment, income, and tax revenue that could fund social policies. However, despite operating for five years, electronic betting platforms have yet to contribute any tax revenue.

Collection will begin once the Ministry of Finance authorizes commercial exploitation. Concessions will be granted following a technical and legal evaluation, with a fee of BRL 30 million payable to the Brazilian government. The deadline for obtaining this authorization is the end of the year.

Advocates for legalizing gambling often overlook the tax losses incurred in other sectors due to increased gambling expenditures, as well as the rise in state spending on public security and mental health care.