(Bloomberg) -- Brazil will tighten online gambling rules amid growing concerns that families are spending down savings and going into debt to bet on sports and other games.
The Finance Ministry announced Tuesday that it will suspend the activities of online gambling companies that have yet to request authorization to operate in Brazil starting Oct. 1. It is also working on regulations that would prohibit Brazilians from using credit cards to place bets and bar companies from offering credit to gamble on their websites, Finance Minister Fernando Haddad said.
The rules are part of President Luiz Inacio Lula da Silva’s broader effort to regulate online betting. They aim to prevent Brazilians from experiencing gambling-related financial problems, which Haddad described Tuesday as an “epidemic” that demands government action.
“It’s becoming a serious social problem, and we have to face it,” he told reporters in Brasilia.
Latin America’s largest economy legalized online gambling in 2018, and has since blossomed into one of the world’s fastest-growing gaming markets. The government, however, had not pushed to regulate the industry until last year, when Congress approved a framework for companies seeking to operate in Brazil as part of Haddad’s attempts to raise new revenue and balance the country’s budget.
Around 25 million Brazilians have started betting in the last six months, raising the total number of participants to 52 million, according to Instituto Locomotiva, a Sao Paulo-based research firm. One in every five gamblers considers betting a form of financial investment, according to an annual survey from Anbima, the country’s capital markets association.
The rapid growth — and potential effects on household finances — have caught the attention of regulators and even the central bank, with Governor Roberto Campos Neto saying in August that betting has become a relevant part of middle class budgets.
The Finance Ministry has spent this year working on rules to govern online gambling, and companies will have to begin complying in January. Any firm that wants to operate in Brazil will have to pay a fee of 30 million reais ($5.5 million). So far, 108 companies have requested authorization, according to the Finance Ministry.
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