Online gambling increases default rates by 20% and reduces credit by 16%.

A groundbreaking study on the effects of online gambling on personal finances concluded that starting to play on betting sites increases the proportion of gamblers with overdue payments by an average of 20%, compared to those who do not gamble. The research also identified that banks reduce the available credit limit by up to 16% for those who join gambling platforms.

The research was conducted by Sérgio Firpo, a professor at Insper, and economists from Stone, a banking and payment services company. The results were published by Folha de S.Paulo this Tuesday (September 8th). The article, titled “Online Betting and Financial Difficulties: Evidence from Brazil”, has not yet been published in a scientific journal.

The methodology adopted by the study compared bettors who placed their first bet after January 2025, when gambling was regulated in Brazil, with people of similar profile who had not yet gambled. The bank transaction data came from Stone's customer base; the delinquency and credit access indicators came from the Central Bank.

Overdue card and reduced credit.

Among the bettors monitored, the fraction of overdue credit card bills grew by 38,7% in the first year after starting to bet, even after discounting the variation observed among those who do not gamble. The effect is especially concentrated among players who commit large portions of their income to the platforms; one in ten bettors allocates more than 20% of everything that leaves their account each month to betting.

“Default rates are rising for a simple reason,” Firpo stated. “The money people send to betting sites is money that is no longer available to pay the bill. And, for a portion of bettors, it’s not a small amount. One in ten bettors sends more than 20% of everything that leaves their account in a month to betting sites. When a fifth of the budget disappears like that, a bill that would have been paid is no longer paid.”

In addition to default rates, the study identified a contraction in access to credit for gamblers. The available loan limit fell, on average, by 16% compared to what the gambler had before they started gambling, controlling for the overall evolution of credit in the economy. Rômullo Carvalho, an economist at Stone and co-author of the article, stated that this magnitude is comparable to the reduction in credit caused by job loss. A master's thesis defended in 2023 at PUC-Rio, authored by economist Natália Corado, had estimated that layoffs in collective reduction processes cause a drop of approximately 20% in the credit card limit of workers.

Gamblers lose more than they win.

The transaction data analyzed by the study reveals that 82,5% of bettors receive no money back from the platforms in the first six months of gambling. During the same period, 90,8% transferred more money to the betting sites than was returned to their accounts.

The study also identified a reverse trend; a portion of the bets appear to be motivated by pre-existing financial difficulties, meaning people who are already in debt resorting to gambling platforms.

Carvalho considered that the documented effects among Stone's clients tend to underestimate the impact on Brazilian bettors as a whole. This is because Stone's clients are, on average, older than the general profile of bettors in the country, according to data from the Secretariat of Prizes and Bets of the Ministry of Finance. The study itself found that young people commit a larger share of their income to betting and have higher default rates, which means that the age group with the greatest exposure to risk is underrepresented in the sample.

Macroeconomic effects and debate on regulation.

Carvalho stated that the aggregate effects of the sector on the economy should be taken into account. “We didn't measure it, but we know that there are 25 million Brazilians who gamble, according to the Ministry of Finance. Since we found a credit contraction effect in our study, you probably have credit contraction effects on the universe of gamblers. So, yes, there are probably macroeconomic effects.”

Both Firpo and Carvalho advocate for stricter restrictions on the sector. Firpo stated that online casinos, a modality that includes games like "Tiger Rider," represent the most serious risk because they are continuous, instantly resolved, and repeated in sequence. He believes it's necessary to "impose strict limits there, to set clear costs." Carvalho questioned the effectiveness of the 13% tax levied on the total amount wagered minus the winnings paid by the platforms. "This business is only growing," he said. "If the objective of the taxation is, as in the case of cigarettes, to reduce consumption, it doesn't seem that the current level is effective. This taxation is not effective in containing the volume of bets."

What the Insper and Stone study on bets and defaults doesn't answer.