Since October 12, the activity of more than 2,000 illegal online gambling sites has been suspended, that is, 90% of the companies that were operating illegally in the tropical country. Only 210 websites, which were regularly registered on the list created by the Ministry of Finance to bring order to the sector, will be able to continue operating.

The measure was announced in September, when a call was launched both for companies that operated outside the law, as well as for users who wanted to recover the money deposited in these betting applications.

The Minister of Finance, Fernando Haddad, explained: “Many of these sites are not in national territory, they do not have an address in Brazil. People who connect to the Internet could be placing a bet in a tax haven. In fact, people may even be placing a bet at what they think is a bookmaker, and it isn't. It's just a scam. That's why action is being taken, because people are being misled.”

Six years of legalization and growth
In September, more than 22 million people bet on these apps and online sites, according to DataSenado. This is equivalent to 13% of Brazilians over 16 years old. More than half of the bettors earn up to two minimum wages (the equivalent of 500 dollars). Most players spent up to 500 reais (about 88 dollars). Another report from the Central Bank reveals that in August almost 21 billion reais (3.718 billion dollars) were transferred to betting sites.

Online betting companies, known in Brazil as Bets, were legalised in 2018 by former President Michel Temer. Since then, their number has grown exponentially.

Experts say that betting became very popular in Brazil in part thanks to the exploration of the national passion: football. Another central aspect is the illusion of making easy money. This promise particularly attracts low-income users, who see a chance to improve their financial situation in online games such as ‘tigrinho’, based on the same logic as casino slot machines: the player pays to try to line up identical symbols by spinning a random wheel or pressing a button on their cell phone.

The online gambling addiction is causing a real epidemic of divorces. There are no official figures, but the Brazilian press has reported testimony from lawyers in São Paulo, the richest state in Brazil, who claim that gambling represents 80% of their divorce cases. “Betting is the new crack, it is a pandemic. The trend in the last two years and for the next two years is that it will grow a lot,” says a member of the Anonymous Gamblers Group.

Links with illegality
Bets have achieved a certain omnipresence in Brazil since they began to sponsor major events such as the Rio de Janeiro Carnival and countless large-scale sporting events. There are even some police investigations underway that try to prove the link between virtual betting and money laundering from drug trafficking and the Jogo do Bicho, an underground lottery that moves billions of reais each year.

This week, the Senate approved the creation of a Parliamentary Commission of Inquiry to clarify the relationship between these irregular websites and their possible links to money laundering.

The senators have a lot of work ahead of them, although the start date has not yet been disclosed. Last year, betting houses earned between 60 and 100 billion reais (between 10.6 and 18 billion dollars) in bets in Brazil, almost 1% of GDP, according to projections by Strategy&Brasil, the strategic consultancy of PwC.

In addition, a study by Banco Santander estimates that in 2023 Brazilians will have spent between 100 billion reais in Brazil (about 18 billion dollars) and 150 billion reais (about 27 billion dollars) on online gambling, traditional federal lotteries and activities that remain illegal (such as Jogo do Bicho).

According to experts, under normal conditions half of this money would be used to consume goods and services, something that is of great concern to retailers. The Jogo Legal Institute, which represents the sector, claims that there has been a delay in regulating the market.

Even the Bolsa Familia social program has been affected
Amid the controversy over the regulation of online gambling, on September 23 the Central Bank released an analysis of the gambling market in Brazil that caused much shock in public opinion. The document reveals that in August alone, five million beneficiaries of Bolsa Familia, the social income transfer program created by President Lula in 2003, spent 3 billion reais (531 million dollars) on virtual betting.

On that occasion, the president of the Central Bank, Roberto Campos Neto, acknowledged that online betting and gaming platforms are compromising the income of Brazilian families. He also highlighted that since January there has been an increase of more than 200% in the amount of money that players transfer to these companies through Pix, a free transfer method introduced in 2020 by the Central Bank. “It is something that draws attention and we are beginning to realize that in the end it will have an effect on non-payments,” said Campos Neto.

The political opposition to the current government took advantage of this news to criticize this social program of the left-wing government, which currently benefits 20.7 million families, or what is the same, one in four Brazilians, according to official figures.

The initial response of Lula's team was to propose that the Bolsa Familia card have limitations for use on online betting platforms, but the Minister of Social Development, Wellington Dias, ended up backtracking, and stated:

We are facing a gambling problem that affects 52 million Brazilians, according to several studies. We are talking about approximately half of the adult population. When we separate the public from the Bolsa Familia, we are talking about approximately 17%. Therefore, it is not reasonable for us to enter into this attempt to demonize Bolsa Familia users. We are facing a serious problem

"The damage that the proliferation of gambling is causing in the country, among the beneficiaries of Bolsa Familia and many others of the most varied income levels, knocks on the door of the administration of President Luiz Inácio Lula da Silva. The problem arises as if the federal government had been taken by surprise. The Workers' Party administration is reaping the fruits of having treated the issue as a search to find new sources of income, forgetting what could be caused by gambling that easily reaches the cell phones of millions of people," wrote Francisco Leali, a columnist for the newspaper Estadão, very critical of the left-wing government.

In the 2024 Budget, estimated revenue from sports betting regulation is around 728 million reais (129 million dollars). The Treasury plans to collect up to 3.4 billion reais (602 million dollars), if all companies comply with the regulations.

Gambling addiction, a growing health problem

The growth of virtual betting has also raised concerns about health issues. The Integrated Outpatient Program for Impulse Disorders (Pro-Amiti), in São Paulo, has recorded a significant increase in requests for help: from 58 people in 2022 to 160 in 2023, that is, there was a jump of 175%. The increase in demand from young adults (18 to 30 years old) was even more significant, reaching 480%.

Psychiatrist Hermano Tavares, coordinator of Pro-Amiti, says: “Demand always increases when access to gambling is expanded and a game becomes popular. This was the case with bingo, until it was banned in 2004. Now, the phenomenon is repeated with online gambling.”

A report by the Brazilian Institute of Family Law points out that addiction to these games “is associated with a vicious circle of excitement and relief, followed by guilt and anxiety, which leads the individual to return to gambling to relieve these negative feelings.” The authors of the article, lawyers Patrícia Gorisch and Paula Carpes Victório, point out that “in this context, intermittent reinforcement – ​​the random reward offered by gambling – plays a crucial role as it fuels expectations and excitement, making the behavior more difficult to control.”