Caixa Econômica Federal has announced the upcoming launch of its own online sports betting platform. The initiative likely reflects a search for new revenue sources, given the decline in interest in the lottery, which generated 10% less revenue in the first quarter of the year.
In an interview with Folha, the bank’s president, Carlos Vieira, also discussed financing for large companies and mortgage credit for individuals earning between R$8,000 (US$1,435) and R$12,000 (US$2,150) per month.
In all these cases, Caixa deviates from the role of a public bank, which is to offer credit to segments underserved by the private sector due to low profitability and high risk — such as microenterprises — but whose activities generate public benefits.
The bank president’s focus on dividend payments is clear when he states: “If I can deliver better results to pay more dividends, I will do it.” This comes in a context where dividend payments to the Treasury are already lower than in the past, and the government is running fiscal deficits.
While prudent management of public credit policy is necessary — since chronically loss-making operations can burden public finances and become unsustainable — the goal of a public bank should not be to maximize profits for shareholders, as private banks do, but to promote social welfare.
Caixa has a peculiar structure. Unlike the global experience where public credit is mainly financed by government budgetary resources, Caixa’s operations are supported by earmarked credit.
Its mortgage lending is funded by savings accounts (Caixa holds 37% of the market) and the FGTS (Caixa is the main operator), both of which offer returns below market rates.
This model allows for a robust official credit policy (Caixa is the largest bank in the country in credit operations), but it is not without side effects, such as dampening the power of monetary policy and reducing credit market efficiency.
The drive for more dividends for the Treasury and to finance public spending also extends to lotteries — Caixa is the country’s main lottery operator, a role that is a Brazilian peculiarity, with no comparable model internationally.
The lottery’s surplus funds go to the government coffers (R$11 billion -US$1.97bn- in 2023), mainly for Social Security, Public Safety, and Sports, in addition to contributing to the bank's financial results.
Expanding into the betting market might make business sense for Caixa, but it is inconsistent with the mission of a public bank. Worse, it seems reckless given the growing concern about the expansion of betting platforms since they were legalized in Brazil in 2018. This market may soon require stricter regulation, as seen in other countries.
A recent study by Scott Baker, Justin Balthrop, and other authors revealed that online sports betting in the US harms family finances more than other forms of gambling, significantly reducing savings and increasing credit card debt (credit card use for bets was banned in Brazil starting October 2024). The authors highlighted the potential adverse effects on vulnerable families.
According to the Central Bank, between January and March of this year, bettors spent up to R$30 billion (US$5.4bn) per month on betting platforms. The Central Bank estimated that around 24 million individuals engaged in online gambling in August 2024. Of these, 5 million are Bolsa Família recipients, who transferred R$3 billion (US$540m) to betting platforms via Pix.
About 17% of Bolsa Família beneficiaries placed bets during this period. Among those earning up to two minimum wages, 38% bet on these platforms.
Moreover, a study by Unifesp shows that 10.9 million people in Brazil engage in risky betting behavior. Among bet players, this rate is 66.8%, compared to 26.8% in other gambling modalities.
The pursuit of financial returns should not be Caixa’s goal, but rather addressing the gaps left by the private sector, preferably avoiding overlaps.
Even worse is engaging in activities that may harm the financial well-being and mental health of the population. There is no responsible gambling initiative that can justify this endeavor.
Zeina Latif
Economist - Associate at Gibraltar Consulting, former Secretary of Economic Development for the State of São Paulo Government, and former Chief Economist at XP INVESTIMENTOS.
Economista
