Exclusive to VALOR: Central Bank's betting data opens new tug-of-war between betting sites and retail.

The release of the Central Bank's technical analysis on the size of the "betting" and gambling market was a shock to the market and opened a new front in the tug-of-war between consumer companies and sports betting companies. The release caught both retailers and betting companies by surprise, but with opposite effects, according to an exclusive report by VALOR.

While trade associations have gained renewed traction with the argument that the unregulated growth of betting is diverting revenue to gambling in a worrying way, representatives of gaming and betting companies, even those that are regulating their operations in the country, criticized the published figures.

In the last few hours, Valor has learned that analysts from publicly traded banks have been collecting more data on the Central Bank's survey and are expected to publish reports warning clients of potential effects on consumption.

This comes just a few months after the end of the debate surrounding competition between foreign marketplaces and consumer companies, another controversial debate that affected market projections and the sector's performance.

The effects on the market

According to two executives from the betting market, there is a lack of clarity in the methodology used by the Central Bank in collecting the numbers in its database. The agency published a technical analysis with an estimate of monthly disbursements, from January to August, of R$ 18 billion to R$ 21 billion, as reported on Tuesday (24).

“Even studies with higher numbers indicated annual spending between R$60 billion and R$130 billion on betting in Brazil. When gambling is included in this calculation, this annualized R$240 billion figure based on the Central Bank is far higher than previously estimated,” says a director of one of the largest betting companies in the country.

Furthermore, it's important to consider that a portion of the wagered funds is returned to the users' accounts and therefore remains available to the players.

Companies fear that the government will further tighten regulations on the sector through the publication of decrees in recent weeks, or that the discussion will intensify around a possible "cap" on the amounts transferred to gambling and betting.

Retail chains have been internally debating the possibility of taking this discussion about limiting bets to the National Congress. Valor learned from two companies in the sector that more than 90% of digital transactions are paid for by Brazilians using Pix, information that the Central Bank has access to.

Credit cards account for a minority of transactions because companies don't accept them due to the risk of the user requesting a chargeback if they lose all their betting money.

More disagreements

Another question involves the Central Bank's calculation that 15% of the disbursed amounts remain with the betting houses. This rate would be a kind of gross margin for the sector.

A second executive in the sector says that number is well below 15%. "It doesn't even reach 10% in Brazil," he states.

Companies do not disclose this percentage openly in the country because gaming companies are privately held in Brazil, which makes verification difficult.

A betting consultant, who has sold businesses to foreign platforms, says it's difficult to understand the data collection used in the analysis, considering that the vast majority of companies used in the study are not registered or have a CNPJ (Brazilian tax ID).

This information was cited by the Central Bank in its technical analysis, which used CNPJ (Brazilian corporate taxpayer registration number) and CNAE (National Classification of Economic Activities) data for the survey.

Companies without proper registration in the CNAE (National Classification of Economic Activities) had their figures included in the agency's analysis based on a set of criteria defined by the bank, such as mentions on the internet or having "typical characteristics of betting transfers".

"How can they base an analysis on CNAEs if there is no record of the companies?", says this consultant and former businessman.

Bolsa Família resources

Companies are still questioning the potential risk to individual freedom if the idea of ​​limiting a bettor's right to decide what to do with their money goes ahead. This is true even if the funds come from social programs, since it is a matter of citizen autonomy.

The Central Bank's survey shows that R$ 3 billion spent on games and bets in August came from Bolsa Família funds, out of a total of R$ 21,1 billion — that is, 14% of the monthly total.

The other side

On the other end of this discussion, consumer companies see the Central Bank's publication as confirmation of the risk of uncontrolled spending on gambling by Brazilians.

Roberto Campos, president of the Central Bank, even stated, on Tuesday (24), at an event, that the issue worries the institution due to possible pressure on default rates.

President Lula (PT) also stated on Tuesday that, without progress in regulating the new law for the sector, which will be valid after January 1, 2025, there is a risk that the country will have "casinos operating inside the kitchen of every home."

Furthermore, a few weeks ago, retail entities, with the support of IDV, the sector's main institute, warned about the diversion of Bolsa Família funds to betting and slot machine games, some of which are operating irregularly. There is already a discussion on this topic between IDV representatives and federal deputies, focused on ways to raise public awareness.

In practice, retailers fear a loss of disposable income due to "bets" and the "tiger game," among other slot machines operated by platforms that violate responsible gambling regulations. Therefore, they have increased political pressure on the issue and are taking a more open stance on the matter.

Platforms of foreign companies

Within this framework, leaders of organizations have highlighted the harmful effect on mental health, and that, because of this, the government should pay more attention to this surge in spending, especially on platforms of foreign companies that operate irregularly and will need to adapt to the new law after 2025.

This is a perception that does not please gaming companies. Privately, sources from betting companies claim that global studies show that addictions of any kind affect 1% to 2,8% of the population, and that digital gambling addicts in the country are at levels well below this indicator.

And they say that retail companies are using this mental health information to try to limit the activities of betting companies in general, and not just the smaller ones, which may be operating outside of responsible gambling guidelines.