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Businesses The Almighty Buck

Brazil's Online Betting Surge Sparks Debt Crisis as Users Turn To 400% Loans (yahoo.com) 53

Posted by msmash from the alarmingly-concerning dept.
Brazilian officials are scrambling to control a gambling boom that has led some citizens to take out loans with interest rates as high as 438% to fund their betting habits, sparking concerns about household debt levels.

The surge in online betting has doubled Brazil's gambling population to 52 million in six months, with the central bank estimating monthly gambling spending between 18-21 billion reais ($3.1-3.6 billion) through August 2024. Central Bank President Roberto Campos Neto said lower-income families are disproportionately affected, with 20% of government social program payments in August directed to online gambling sites.

The Finance Ministry has accelerated regulatory measures, requiring over 100 betting companies to submit operating paperwork ahead of schedule. New rules starting January 1 will allow authorities to limit bet amounts, block payment systems, and monitor for money laundering. President Luiz Inacio Lula da Silva recently raised concerns at the UN about gambling's impact on Brazil's poorest citizens, while officials are moving to ban credit card use for betting and restrict gambling advertisements.

Brazil's Online Betting Surge Sparks Debt Crisis as Users Turn To 400% Loans More | Reply

Brazil's Online Betting Surge Sparks Debt Crisis as Users Turn To 400% Loans

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  • My addictions don't include gambling - or alcohol - for which I am very grateful. But I recognise they are powerfully destructive in many people's lives, and we need to work out how to reduce the harm that this causes. to the victims, most commonly the other members of the family. All suggestions welcome!

    • Public education and subsidized (when not corrupt) treatment programs really help.
      • Just let the shady monster types that give out these loans beat the hell out of the degenerate gamblers who take them in public. As long as no one is losing fingers our puking up a spleen it should be fine. I think that's maybe the only kind of education program that might work, because the only thing I really recall about the educational programs that were targeted at my generation when we were young and in school is that it just made us want to try cigarettes or other drugs more. Short eliminating all bla
        • The beatings will continue until idiots wise up.

          A.K.A. The beatings will never stop, and human cruelty is openly embraced. Which is always the non-solution that idiots resort to when "Do as I say" fails.

  • Hold on... (Score:3)

    by CEC-P ( 10248912 ) on Friday November 15, 2024 @09:55AM (#64947749)
    What kind of idiot loan company thinks lending to gamblers will result in getting their money back? Because they won't. It doesn't matter what the interest rate is, they're going bankrupt. Is property seizure really expedited in that country or something?

    • Maybe it's so high because they know that only a small % will be able to pay it back?

    • markers are at 0% for 30 days max but after if you don't pay!

    • They're loaning to people on the dole. They just need to wait for the next month's cheque to arrive before squeezing them for as much of it as they can. It's not any different than credit card companies in the U.S. or other western countries that charge much less exorbitant rates, but will gladly collect the minimum monthly payment from now until a person dies.
      • All the more reason to ban personal loans. A company that takes out a bad loan has assets that can be seized to pay it back. An individual person without a job relies on the social programs. A.K.A. society to bail them out.

        I'd say at bare minimum we need to ban personal loans for anyone who doesn't have a job and has outstanding debt on their credit report. In the form of a instant court dissolution of the loan for the lender not performing due diligence or willfully issuing the loan despite the individua

    • Re: (Score:2)

      by gweihir ( 88907 )

      It will be profitable, just not at 400%. There are countless examples.

    • They don't WANT to get their money back. They want perpetual interest.

  • Who? What? Why? (Score:5, Insightful)

    by nightflameauto ( 6607976 ) on Friday November 15, 2024 @09:59AM (#64947757)

    I'm baffled by all parties involved in this. The 438% rate makes sense, as the liability for lending to known gamblers has to be absolutely batshit insane. The chances of payback must be well above the gamblers threshold. It's almost like the loans are being offered by gamblers themselves. It's gambling all the way down. Good grief.

    And who would take a loan at that rate for any reason? I get gambling addiction is a thing, but even so you'd think some part of the brain would go, "I'd have to quadruple my money just to pay back the loan I took to make the bet. What are my chances?" That's not even gambling at that point. That's guaranteed failure.

    • under duress. TV makes us think that they do because we see the cool guy cut the right wire and win the day.

      So you get people saying "If I can just win this one gamble I can get out ahead of everything".

      It's not rational, but again, people under pressure don't think and act rationally. In the real world bomb disposal is done by robots and even then you've got an engineer with years and years of training who do hundreds if not thousands of simulations.

      • So you get people saying "If I can just win this one gamble I can get out ahead of everything".

        It worked for James Bond in Casino Royale, so why not?

      • under duress. TV makes us think that they do because we see the cool guy cut the right wire and win the day.

        I can understand why the gamblers take the loans - afterall they will think that if they win big they will easily be able to pay it all back regardless of how unlikely that is. However, I fail to see why anyone with money would lend it to them. The lenders are not under duress and have to know that the chances of them getting their money back is zero regardless of how insane an interest rate they set.

        • Re: (Score:2)

          by gweihir ( 88907 )

          However, I fail to see why anyone with money would lend it to them. The lenders are not under duress and have to know that the chances of them getting their money back is zero regardless of how insane an interest rate they set.

          Actually, they will get some nice profit if they manage this well. Remember that some of these gamblers will win and they will pay back with huge interest. My take is that the rate of that happening is enough here.

      • Re: (Score:2)

        by gweihir ( 88907 )

        under duress. TV makes us think that they do because we see the cool guy cut the right wire and win the day.

        To be fair, some people can make good decisions under duress. That is just not most people. The problem here is that most people do not realize their skills are not exceptional and may even be below average. The gentlemen Dunning and Kruger have nicely documented this effect.

        Given that the people we are talking about are gamblers, below-average decision making skills are a good initial assumption.

    • ok if you fix the match we will wipe out your loan!

    • And who would take a loan at that rate for any reason?

      The same people who use a check cashing firm rather than having a bank despite the large cut taken out of each paycheck. They'll be poor forever since they lose so much money every time they cash their check.

    • Re:Who? What? Why? (Score:5, Interesting)

      by mridoni ( 228377 ) on Friday November 15, 2024 @10:51AM (#64947901)

      It's not really "lending to gamblers", they are not giving money with the explicit purpose of it being used for gambling and such (nobody would be crazy enough to do that).

      In Brazil, credit cards are used as a way of financing not only current expenses (let's say a trip, your daily shopping, etc.) but also in place of small loans (those are not very common), and used to buy appliances, pay a unexpected bill that you cannot afford with your standard income, etc. This model leads to a huge problem with unpaid credit card invoices, that is predatorily explored by financial institutions that apply sky-high interest rates for overdue bills. The issue is rather complex: you have a mix of economic disadvantage, social inequality, lack of financial education and predatory practices. The current government is trying to curb the latter, but given the general lack of economic resources for a big part of the population, and the impossibility for them to access better lines of credit, the problem is not going away any time soon.

      Gambling is simply another way to spend that credit card money, and it's obviously particularly awful, but a lot of people who bought a refrigerator, a kitchen stove or an old car they need to work, are in the same situation, with interests that they cannot afford to pay back.

      • The issue is rather complex: you have a mix of economic disadvantage, social inequality, lack of financial education and predatory practices.

        Sounds like home (USA). Or at least, the path we seem to be slaloming toward.

      • Re: (Score:2)

        by tlhIngan ( 30335 )

        In Brazil, credit cards are used as a way of financing not only current expenses (let's say a trip, your daily shopping, etc.) but also in place of small loans (those are not very common), and used to buy appliances, pay a unexpected bill that you cannot afford with your standard income, etc. This model leads to a huge problem with unpaid credit card invoices, that is predatorily explored by financial institutions that apply sky-high interest rates for overdue bills. The issue is rather complex: you have a

    • Why would people vote for a business man who failed to run a casino to lower inflation?
      Why would people think lowering inflation would set prices back to what they used to be?

      • People are stupid.

        • Indeed. This last election was a choice between "Slight course correction," or "Blow up the ship." We decided to blow it up. What kind of people decide to blow up their own ship while they're on it?

          • Re: (Score:2)

            by gweihir ( 88907 )

            What kind of people decide to blow up their own ship while they're on it?

            People that do not understand the situation at all but are unaware of that. The Dunning-Kruger effect nicely explains how that works.

      • That's not how elections work. Voters are not asked who is the best person to run the country in general, they are asked which of these two or three people are best to run the country. Kier Starmer and, before that, Boris Johnson, did not win elections in the UK because voters thought they would be a great choice as leader. They won because people thought the alternative was worse.

        Terrible candidates can win elections if their opponents look even worse to voters. However, recently it seems to have become
      • Maybe electing him to destroy the Department of Education was a good thing?

        On a more serious note, poor, low info voters are the ones that vote for him. It's as simple as I can't afford anything, it's the current president's fault. That's obviously not remotely true, late stage capitalism is.

        • Re: (Score:2)

          by gweihir ( 88907 )

          On a more serious note, poor, low info voters are the ones that vote for him. It's as simple as I can't afford anything, it's the current president's fault. That's obviously not remotely true, late stage capitalism is.

          Sad as that is, this is pretty much what is going on. The US will now devolve into a regular country somewhere between 1st and 2nd world. It was bound to happen eventually, but now it is going to happen fast. And that will be much worse for those that have trouble affording things. The lesson here is that somebody that actually carefully listens to you (and Trump did) may just be running a scam.

      • Re: (Score:2)

        by gweihir ( 88907 )

        People are generally not smart, lacking in education about anything a bit more complex and tend to hallucinate that things will turn out well if they do just the one thing somebody told them will turn things around. In actual reality, that failed businessman will tank the economy because he does not understand how things work at that scale and in that setting. And now he is surrounding himself with yes-men and the incompetent, so I guess it will not even take 4 years to create a major disaster. His own folk

    • And who would take a loan at that rate for any reason? I get gambling addiction is a thing, but even so you'd think some part of the brain would go, "I'd have to quadruple my money just to pay back the loan I took to make the bet. What are my chances?" That's not even gambling at that point. That's guaranteed failure.

      It's hidden behind a paywall unfortunately so there's no point in providing a link, but within the past 4-6 weeks or so, the online sports website The Athletic did a profile of a guy who lost everything by sports gambling. He went into a lot of detail on what happened and his thought process during the gambling. He basically believed that he couldn't lose so when he did, he kept placing riskier and higher money bets to try to get back his losses. At times he did win, but that just fueled his belief tha

      • Re: (Score:2)

        by gweihir ( 88907 )

        That's how addiction is.

        Indeed. Addiction is a great amplifier for delusions. Obviously rational people (only about 20% of the population) often find a way to handle that, but most people do not and get completely lost in their made-up fantasy of how things work.

  • Give them time (Score:4, Funny)

    by Dan East ( 318230 ) on Friday November 15, 2024 @10:02AM (#64947767) Journal

    Just give them more time. They're certain they'll win it all back eventually. Given enough chances.

  • "Let's legalize gambling! What's the worst that could happen?"

    "I dunno, what about all the things that happened last time gambling was legal?"

    • Re: (Score:2)

      by mjwx ( 966435 )

      "Let's legalize gambling! What's the worst that could happen?"

      "I dunno, what about all the things that happened last time gambling was legal?"

      Because when gambling is made illegal, it simply disappears, right? Guys? Right?

      It's better off having it legal and controlled than illegal and uncontrolled. You cant really stop people gambling, it's like fucking and the church has failed to stop that for 2000 years. If you keep it legal, you can make the houses responsible for ejecting problem gamblers. Works well enough in most countries.

  • Gambling is permission to print money for the house. Still, people love gambling so instead of privatizing it, use state-owned gambling to raise money to be put back into the community.
    Next thing you know they'll allow betting on elections - now people will have motivation to vote the way they bet.
  • Maybe the government should run a gambling concern of their own. When my mom ran a bar, there was one employee who would lose all her wages to the gambling machines. What we tried that worked was to set up one machine where the odds were even. On average, the winnings matched the losses. Then my mom told the one employee - only play this one, it's your machine. It worked! The gambling instinct was sufficiently engaged, and the net loss was primarily one of time. Maybe the government could have a publi

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