Call for evidence on gambling online with credit cards

The Gambling Commission has today published calls for evidence (that will remain open until 16 May 2019), requesting data and views on two separate issues (but linked in the sense of seeking to prevent gambling-related harms), namely:

  1. Gambling online with credit cards
  2. Category B gaming machines and player protection (on which we have reported separately here).

Gambling online with credit cards

In last year’s Review of Online Gambling document, the Gambling Commission:

  • included as Appendix C the Advice on online gambling provided to it by the Responsible Gambling Strategy Board; that Advice had noted that gambling with borrowed money, including with a credit card, is already well-established as a risk factor for harmful gambling,

and

  • outlined its support for the principle that consumers should not gamble with money they do not have, saying that it would consider restricting or prohibiting the use of credit cards for gambling, but that it would explore the consequences of doing so by conducting further work in this area.

Accordingly, the Commission is now “seeking meaningful input to help determine if restrictions, potentially including an outright ban, are necessary to limit risks to consumers”.

Announcing the call for evidence on its website today, the Commission states:

It acknowledged that online operators may not always be aware that a customer is gambling with borrowed funds, as money can be borrowed other than through credit cards – for example, where a customer is gambling using an overdraft or a loan. While the variety of available forms of credit may pose some challenges for consumer protection, the key principle underlined by RGSB is thatgambling with borrowed money significantly increases the risk that consumers will gamble with more money than they can afford“.

The RGSB therefore recommended restricting consumers’ ability to gamble online with credit, including prohibiting gambling online with credit cards.  

It goes on to say:

To help us develop our understanding of the issues we will be requesting information from a range of stakeholders including gambling operators and financial institutions, and we will be engaging with debt relief charities and consumers (for example those who have accessed services to treat gambling-related harm). Gambling with credit cards will also form part of the Commission’s research priorities over the next year.

In addition to our data requests and engagement we are inviting all stakeholders to respond to this exercise, in particular to:

  • provide any information that will enable us to develop a comprehensive picture of gambling with credit cards, including the scale of their use for gambling and the risks associated; and  
  • provide evidence of effective harm prevention measures that might serve as robust alternatives to prohibiting or restricting gambling with credit cards. These might include, for example, the full rollout of card-blocking facilities that enable consumers to block gambling transactions via their credit cards, or imposing account limits until operators have verified further information about the customer (for example, assessing the levels of gambling spend the customer might be able to afford), if such controls are demonstrably effective.  

We will set out some detailed proposals for further consultation based on the evidence gathered from this exercise, and from our ongoing work in this area. However, in the absence of effective consumer protections to limit the risks of harm posed by gambling with credit cards, we will consider whether regulatory interventions such as restricting or prohibiting gambling via credit cards are necessary.

As evident from the above, the issue of “affordability” (the subject of this month’s SBC News “Licensing Expert” article by David Clifton) rears its head again. Also worth noting is concern expressed by the Commission that, if credit card use for gambling was prohibited or restricted:

  • consumers may increasingly:
    • seek to access alternative forms of borrowing money (e.g. payday loans, secured/unsecured loans and overdrafts),
    • use illegal lending sources (e.g. loan sharks) or
    • turn to crime,
  • data for algorithms would be lost,
  • consumers may lose protection under the Consumer Credit Act 1974 and
  • there may be an adverse impact on overseas gambling consumers who often do not have debit cards.

You can express your views by completing an online survey that is accessible here but you can also download the entire consultation document below.

Commenting on both of the calls for evidence, Paul Hope, an executive director at the Gambling Commission, is quoted on the Commission’s website as saying:

We are exploring measures that could help reduce the risk of harm to consumers who use their credit cards to gamble online, and to those who play on all Category B machines. We want consumers, gambling firms and other interested parties to have their say and provide evidence that will help us make gambling safer.

UPDATE: 

1  Within hours of the Gambling Commission’s announcement of the call for evidence, SBC News has reported that UK Finance (a trade association for the UK banking and financial services sector) has stated:

The banking industry wants to help customers avoid the risk of gambling-related harm. The industry continues to liaise closely with government, the Gambling Commission and consumer groups to build on existing initiatives by a number of credit card issuers, including schemes that allow customers to block the use of their card for online gambling. We look forward to further engagement on this issue and will be responding to the Gambling Commission’s call for evidence in due course.

2  A recent Australian-focused paper entitled “The Role of Financial Institutions in Gambling by Swanton T.B., Gainsbury, S.M., & Blaszczynski, J.T. (2019), published in International Gambling Studies, reviewed the role of financial institutions in gambling with the aim of considering ways in which policies and practices could enhance customer wellbeing. Interestingly for those who consider that banks should shoulder a greater degree of responsibility in relation to gambling-related harms, it concluded as follows:

Financial institutions play a fundamental role in consumer gambling activity, whether through providing access to cash for offline gambling transactions, or via electronic funds transfer for online gambling. This presents an opportunity for financial institutions to implement harm-minimisation strategies, complementing interventions provided by industry and regulators. Currently, most financial institutions appear to lack policies on gambling, including strategies to identify and assist financially vulnerable consumers with gambling problems. Financial institutions appear to be largely of the view that they have little business in how customers spend their money (excluding fraud and other illicit activity), regardless of whether customers are spending their own savings or using credit. This view seems to align with public expectations and banks’ regulatory obligations, especially in relation to consumer privacy standards. From a public health standpoint, however, banks do have a certain level of responsibility for how customers use their money. Financial institutions are able to compensate for bias in decision-making, which is fundamental to problem gambling behaviour. A measured approach is needed that enables customers to engage in gambling at an appropriate level, whilst providing those experiencing gambling-related harms with options that do not rely solely on self-enactment by such customers.