Part of financial sector applauds measure against online gambling amid concerns over legal uncertainty
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The number of Pix transactions fell about 10% over the past three days, after the government published a presidential decree (MP) late Friday afternoon (25) banning online sports betting (known in Brazil as “bets”). For part of the banking industry, the ban is viewed favorably, since there are in fact many indicators that betting sites were eroding household budgets, especially those of low-income families, and thus affecting delinquency. Still, there is criticism over the legal uncertainty generated by the measure.
On Saturday (26), the number of Pix transactions (not the financial volume) was 229,600, down 11% from the average of the previous four Saturdays, according to Central Bank data. On Sunday, transactions totaled 165,900, down 12.0% on the same basis of comparison. And on Monday (28), they reached 213,000, a decline of 7.4%. Over the three days combined, the drop is 10.0%, also compared with the average for the same period in the previous four weeks.
“Obviously it’s not possible to attribute this drop in Pix only to the ban on bets, but it gives a sense of the size of the problem. It has become a public health issue,” says an industry leader. “I think it was the right decision by the government. I don’t like betting sites in any sense,” adds a banker at a midsize institution.
As Valor reported Tuesday (29), analysts also assess that the ban on bets could be positive for banks. Citi notes that more than 40 million Brazilians have already put money into these bets, representing about R$20 billion in gross revenue in the first half of this year. “The measure could leave higher disposable income for households, which would translate into better asset quality for banks, especially in the low-income segment,” says a banking source.
Another source in the sector also acknowledges that the measure could have a slightly positive effect for banks by helping ease households’ disposable income. Still, the source criticizes how the government made the decision, creating legal uncertainty and also affecting the fiscal situation.
“I think betting sites do a lot of harm to the local economy and to commerce, and they shouldn’t have been regulated the way they were, but overturning by MP a law and legal structure that was debated for months in Congress is complicated.”
A source in the fintech segment, meanwhile, says that to a certain extent the ban was already expected. “The negative externalities far outweigh the positive ones,” he says, speaking about the effects on society at large. In any case, he notes that some fintechs operate exclusively in this sector and others, though not exclusive, have significant revenue from bets, whether in handling betting flows or in international remittances. “Therefore, an abrupt change will have economic impacts on this subsegment.”
*By Álvaro Campos — São Paulo
Source: Valor International
https://valorinternational.globo.com/