Brazil operators challenge government on impact on household debt

The sports betting industry has submitted a report to the government challenging studies that link betting to increased debt and default rates among households in Brazil.

The document was commissioned by the National Association of Games and Lotteries (ANJL) and pointed out flaws in the study produced by Brazil’s National Trade Confederation (CNC), which attributed a deterioration in household finances to betting.

According to the Radar Econômico column, published by the Brazilian magazine Veja, the document’s central criticism is consistent.

The CNC presents a comparison between periods before and after January 2023 as a “differences-in-differences” analysis, but without a control group. In practice, the model does not offer a counterfactual scenario capable of showing what would have happened to debt levels if betting had not moved forward in Brazil.

A mere coincidence in timing does not prove the bookmakers’ fault

This means that other changes occurring during the same period – such as interest rates, inflation, credit, employment and income transfer policies – may have been captured by the variable assigned to betting. With only 59 aggregated monthly observations, the study allows for pointing out a temporal coincidence but cannot prove that betting was the cause of the change.

The report, which will be presented to the government, is correct in dismantling this claim of causality. However, the conclusion has a significant limitation – showing that the CNC failed to prove the effect of betting is not the same as demonstrating that such an effect does not exist. The document commissioned by the ANJL does not recalculate the estimates, present an alternative dataset, or construct a study capable of independently measuring the platforms’ impact on household budgets.

A review conducted by Radar Econômico also found inconsistencies regarding coefficients, standard errors and statistical significance markers in the CNC tables. In one instance, for example, a coefficient of -0.305 appears alongside a standard error of 0.348 yet is marked with three stars – an indication usually reserved for results significant at the 1% level. The published figures do not support this classification.

This inconsistency reinforces doubts about the original study but also exposes a weakness in the ANJL report. Some of these markers were reproduced without being recalculated. The document itself notes that it did not conduct an audit of the CNC dataset. Furthermore, it presents no code, econometric replication or statistical appendix.

Publicity

The report also moves toward regulatory conclusions that do not stem directly from the methodological critique.

Among these are the defence of advertising as a tool to steer bettors toward authorised platforms and the argument that stricter restrictions would benefit the illegal market. These are relevant points in the debate, yet they are supported only by studies and estimates linked to the industry itself.

The dispute, therefore, is far from resolved. The industry has identified a genuine and significant flaw in the main study cited by its critics, but it is attempting to draw a broader conclusion from that flaw than the data warrants. The report undermines the claim that the CNC has proven the impact of betting on indebtedness. However, it does not absolve betting activities of causing such an impact.