Brazil Banks call for instant ban of credit card use for gambling

Febraban, Brazil’s Federation of Banks, has urged the government to accelerate the planned ban on using credit cards for betting and gaming activities.

The call is led by Isaac Sidney, President of Febraban, who expressed concerns to the federal government about the growing use of credit cards for betting, warning of the risks of debts being accrued by citizens.

Currently, the government and related agencies are in the licensing phase to launch Brazil’s federal fixed-odds sports betting and online gambling marketplace, commonly referred to as Bets.

Planned to take effect from 1 January 2025, the launch of the Bets market will prohibit credit card transactions for online gambling. The Ministry of Finance announced in April that the new rule also prohibits payments made in cash, bank slips, cheques, cryptocurrencies, or any methods that hide the source of funds.

“We are very concerned about how much this could compromise family income and increase defaults, potentially raising the cost of credit,” Sidney stated.

This concern is real. In July, the Central Bank reported a delinquency rate of 7.39% for credit cardholders, close to the 7.71% average over the past year.

A survey by Datafolha in January found that 15% of Brazilians either currently place or have placed sports bets online. The average monthly expenditure for those who bet is R$263, which represents about 20% of the 2023 minimum wage.

The survey also showed that 30% of bettors spend more than R$100 per month. According to Instituto Locomotiva, a third of these bettors are in debt and have two or more credit cards.

This week, the Secretariat of Betting and Prizes (SPA), the agency that will serve as the regulatory authority of the Bets market, announced further developments towards the launch.

Authorised by Regis Dudena, General Secretary of the SPA, from 1 October, all businesses that have failed to apply for a Bets licence must cease their activities. The SPA has enforced a ‘hard deadline’ for unlicensed operators to refund Brazilian customers and close accounts by 10 October.

Businesses that do not comply with the SPA orders will be reported to Brazilian authorities as criminal enterprises infringing the laws of Brazil’s new federal framework for gambling.

Dudena and the SPA stated that they are aware of Brazilian banks’ concerns about credit card transactions and consumer debt.

For that matter, the SPA reiterated that from day-1 of the Bets market, it expects licensed operators to fully comply with Law No. 13,756/2018 and Law No. 14,790/2023, to meet strict regulations related to fraud prevention, money laundering, and IT security, as these are regulatory measures that will be implemented from the start of the Bets launch.