Why do online bets attract so many people?
Bettors don’t see themselves as gambling addicts and allow themselves to fantasize about what it would be like to make easy money.
The explosion of online betting in Brazil has generated enormous challenges, not only for the economy but also for people’s mental health, in addition to significant personal financial damage to bettors.
In a recent technical note, the Statistics Department of the Central Bank pointed out that in 2024 alone, the volume of online betting in Brazil was between R$ 18 billion and R$ 21 billion per month. And the Central Bank believes that this number tends to be underestimated, as it deals exclusively with transfers via Pix from individuals to betting companies.
The Central Bank also estimates, in the same study, that in August alone, 5 million beneficiaries of the Bolsa Família program sent the equivalent of R$ 3 billion to betting companies via Pix.
Several studies and statistics have been published almost daily pointing out the financial, social, and emotional damage that betting has caused. The indicators, while alarming, illustrate the complex relationship we humans have with money.
Data from a survey conducted by the Locomotiva Institute on the profile of gamblers reveals, among other things, that 79% belong to social classes C, D, and E; 86% have debts and 64% have a negative credit history.
Why do people gamble?
Social sciences, economic psychology, and neuroscience have been studying this question to try to explain why so many people allow themselves to be drawn into this mental trap. Even with all the statistics pointing to the extremely low chances of winning, what is most evident is behavioral biases acting to the detriment of rational assessments.
In general, gamblers don’t see themselves as gambling addicts, and they convince themselves of things like “it’s just occasionally,” “I only gamble a few small amounts,” “someone has to win, so I’ll try my luck,” or even absurdities like “I know someone who lives off gambling and earns very well,” among others.
Many people allow themselves to fantasize, even if only briefly, about what it would be like to make money easily, and most of those who place bets online, at the moment of disbursing money on the game, are actually buying a small dose of hope.
The brain doesn’t calculate large numbers.
It’s no use telling a gambler that their chances of winning are, for example, 1 in 175 million, because the vast majority of people won’t reason that way; that is, the human brain has to process a lot of information to be able to work with such a small probabilistic concept.
Therefore, the perceived risk in each bet has little to do with the results, and a lot to do with how much fear or hope a bettor is feeling at the moment they are playing.
Online Betting Doesn’t Compensate for the Risks
Combining studies of mathematics and economics (modern portfolio theory), award-winning mathematicians Aaron Abrams and Skip Garibaldi, from the Mathematical Association of America, state: “Don’t buy lottery tickets. It’s too risky. Even the huge returns we find aren’t big enough to offset the enormous probability of not winning.”
Along the same lines, Professor David Sumpter, from Uppsala University, Sweden, states: “If you don’t have strong mathematical skills and have never stopped to build mathematical models to beat the bookies, you won’t succeed.” He adds that the mathematical skills needed to win at online betting are so great that those who possess them will earn much more money working for betting companies than betting.
Only with a significant investment in basic financial education will it be possible to empower bettors to overcome the behavioral biases that lead them to ignore that most prizes are random, and those that are not invariably favor the house, because that’s what this business thrives on.
Eduardo Mira is a professional investor, CNPI analyst, postgraduate in business pedagogy, coordinator of the MBA in Financial Planning and Investment Analysis at Anhanguera Educacional, partner at Clube FII, and founding partner of the financial holding company MR4 Participações.
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