(Bloomberg) – At United Nations Headquarters, surrounded by leaders from around the world, Brazilian President Luiz Inacio Lula da Silva began trumpeting the evils of gambling.
It was an odd topic to bring up at the United Nations’ September annual general meeting, especially since the panel had been convened to discuss efforts to uphold democratic norms, but Lula is too keen to care. I couldn’t do that. He raged that gambling was destroying the finances of countless people, especially the poorest, who were “accumulating debt” to finance their vices.
Days earlier, Finance Minister Fernando Haddad launched a similar outburst in Brasilia, declaring the problem an “epidemic.” Haddad constantly talks about gambling. So did Central Bank President Roberto Campos Neto, who confessed to being nervous about rising household debt figures and, like Lula, worried that much of it was due to gambling. I am doing it. Together, the three are desperately trying to rein in Brazil’s newly liberated online gambling industry.
Gambling addiction is a familiar and growing problem around the world, from the US to the UK to Australia, following the legalization of all sorts of new betting platforms. But what makes Brazil unique is the sense of crisis this boom has created among policymakers, leaving the Brazilian public feeling even more vulnerable to the intoxicating allure of gambling. .
Almost one in three Brazilians lives below the poverty line. And poverty fuels the desire to get rich quick by betting on the local soccer team or spinning virtual roulette. A recent central bank report highlighted the magnitude of the problem and sent shockwaves across Brasilia. 20% of the money the government distributed to major social programs in August was spent on online gambling sites.
“The vulnerability that comes with poverty is what sets us apart,” says Daniel Diaz, a professor at the Getulio Vargas School of Foundation Law.
Add to this the fact that many Brazilians now have access to loans for the first time in their lives, through mobile apps and credit cards with annual interest rates of up to 438%, and you have an explosive cocktail. With so many Brazilians currently carrying gambling debts, Nubank, Latin America’s largest bank, reassures investors that it is limiting its lending exposure to problem gamblers. A statement was released in September just for the purpose.
