Brazil court pushes for ban on betting with social welfare funds

Rajashree Seal December 19, 2024

SiGMA news

Following an appeal from the attorney general’s office (AGU), the Federal Court of Auditors in Brazil has renewed its call to ban the use of social welfare funds, including those from the Bolsa Família programme, for betting activities. This comes after the AGU filed an appeal against a similar Supreme Court ruling earlier in December.

Earlier last month, the Federal Supreme Court (STF) upheld an emergency order by Justice Luis Fux, immediately prohibiting the use of social welfare money for betting. Bolsa Família, a key social programme, supports poor families on the condition that children attend school and receive vaccinations.

However, on December 12, the AGU appealed the decision, arguing that the government didn’t have the technical tools to take the step. It stated that funds from Bolsa Família often blend with other income in the same bank accounts, making it difficult to differentiate which money is used for betting.

The AGU said that it did not oppose the ban but needed a “reasonable period” to resolve the logistical challenges involved in its implementation.

Despite this appeal, Court of Auditors minister Jhonathan de Jesus has urged immediate implementation of the ban, calling on the ministries of finance, sports, and development, as well as Caixa Econômica Federal, Brazil’s federal bank, to act within 15 days from December 15. As per a report, Jesus has also requested for evidential proof on how social welfare funds are being misused for gambling.

“The allocation of funds to betting, an activity that does not contribute to meeting basic needs or overcoming poverty, violates these objectives and compromises the effectiveness of the public policy of social assistance,” he said.

Rights and practical challenges

Meanwhile, the AGU has repeatedly stressed that once Bolsa Família funds are deposited into recipients’ accounts, the money becomes their property, leaving the government powerless to dictate how it is spent.

According to the National Secretariat of Citizen Income (Senarc), only 1% of Bolsa Família beneficiaries withdraw their funds using the programme’s specific card, while 99% use regular bank accounts that also handle other income, such as wages.

“Therefore, it is essential to understand that a possible blocking of the account invades the private sphere, where the citizen moves other income,” the AGU warned.

The AGU also questioned whether the Supreme Court’s ruling should extend to other federal benefits and state-level social aid programmes. It raised concerns about how regulators like the Rio de Janeiro State Lottery (Loterj) would be impacted and whether federal rules for fixed-odds betting would apply to states.

Betting’s broader impact

In September, Brazil’s Central Bank revealed that one-fifth of Bolsa Família funds distributed in August were spent on online gambling.

This has drawn widespread criticism, with economist Ricardo Paes de Barros, who helped design Bolsa Família, saying that online betting is a growing societal issue, not just for poor families. Hence, he said that the real solution can be advocating stricter regulations on the betting industry and better financial education for all Brazilians.

Be Part of the Action! Join the world’s biggest iGaming community with SiGMA’s Top 10 News countdown. Subscribe for weekly updates, insider insights, and exclusive subscriber-only offers.