Gabriel Galípolo, the President of Brazil’s Central Bank, recently addressed inquiries from a parliamentary commission focused on illegal betting. He emphasized that the institution does not possess the authority to shut down unlawful betting platforms.
During an April 8 meeting of the Commission of Inquiry (CPI), Galípolo was directly questioned about the Central Bank’s capability to regulate internet service providers and financial institutions that facilitate illegal gambling activities in the country.
In his response, Galípolo indicated that oversight and regulation of the betting industry is the exclusive responsibility of the Secretariat of Prizes and Bets (SPA). He asserted that the Central Bank lacks the necessary powers to act independently in this domain.
“The SPA is tasked with determining which forms of betting are permissible,” Galípolo stated.
According to him, once the SPA designates a betting operation as illegal, the Central Bank’s role is limited to notifying financial institutions to cease services to those gambling entities. Intervening in individual transactions is beyond the purview of the Central Bank—it is up to the financial institutions themselves.
Galípolo attributed the surge of unauthorized betting sites to the prolonged period of ambiguity surrounding online betting legislation in Brazil, which started with initial congressional approval in 2018 and concluded with formal regulations in 2023.
Do the Central Bank’s Powers Extend to Illegal Betting Enforcement?
Rogério Antônio Lucca, the Central Bank’s executive secretary, provided estimates suggesting that Brazilians might spend between BRL20 billion (approximately £2.6 billion/€3 billion/$3.3 billion) to BRL30 billion monthly on illegal betting this year.
In March, the SPA published Normative Ordinance No. 566, which was aimed at clarifying the processes for reporting the payment methods used to facilitate transactions linked to illegal betting.
Senator Dr. Hiran Gonçalves, chair of the CPI, raised concerns regarding the Central Bank’s role in sanctioning institutions implicated in illegal betting. He characterized the current regulatory framework as a potential “legal vacuum,” a situation that limits governmental agencies’ abilities to combat such activities.
Senator Soraya Thronicke, the CPI’s leader, underscored that the SPA holds the sole authority to impose sanctions on illegal betting companies, questioning whether the Central Bank could take action against payment services involved in these illicit transactions.
Galípolo clarified that the Central Bank’s involvement would only be warranted if a connection to serious financial crimes, like money laundering, is established.
“We lack the legal authority to intervene in transactions associated with illegal betting,” he remarked. “This falls outside our jurisdiction.”
He further explained that measures related to preventing money laundering and counter-terrorism financing allow the Central Bank to ensure that financial institutions implement proper controls and communication channels. However, many incidents are referred directly to other authorities, including the Financial Activities Control Council (COAF), the Public Prosecutor’s Office, and the Federal Police.
The Challenge of Halting Welfare Money from Funding Bets
In a related note, SPA chief Regis Dudena announced last week that using social welfare funds for betting will soon be prohibited in Brazil, with a formal ordinance forthcoming. However, he cautioned that enforcing this ban could prove challenging, as only 1% of recipients of Bolsa Família, a social welfare program, utilize a physical card for accessing their funds.
The vast majority—99%—of these individuals manage their funds through bank accounts, meaning that restricting the physical card may not effectively prevent the use of social welfare money for betting activities.
Providing further context, the Central Bank revealed that a significant portion of funds distributed through the Bolsa Família program was spent on online betting last year.
Galípolo reiterated that the Central Bank does not have the authority to enforce restrictions on welfare recipients engaging in betting activities. “We currently lack the jurisdiction, capacity, and legal mandate to impose such limitations,” he stated.
In summary, the complex landscape of Brazil’s illegal betting scene underscores the limitations of the Central Bank’s authority, revealing structural gaps in regulatory oversight and the challenges associated with safeguarding social welfare funds from betting exploitation.