Consultation on gambling with credit cards

Overview

The Gambling Commission conducted a call for evidence on gambling with credit cards between February and May 2019. The exercise was underpinned by advice from the Responsible Gambling Strategy Board (RGSB)[1] that gambling with borrowed money is a well-established risk factor for harmful gambling because it significantly increases the risk that consumers will gamble with more money than they can afford.

We wanted to explore the consequences of restricting or prohibiting the use of credit cards and noted that the need for regulatory intervention would be more likely if evidence indicates insufficient consumer protections to reduce the risks of harm from gambling with borrowed money. We said we would use the evidence submitted as part of this exercise to develop further detailed proposals for consultation.

Responses received

We received 110 responses to the call for evidence from a range of stakeholders including members of the public, debt relief charities, gambling operators, financial services and some individuals who considered that they had suffered significant financial harm from using credit cards to fund their gambling.

A summary of responses to the call for evidence (PDF) (open in new tab).

We received a range of supporting data from the Remote Gambling Association (RGA) and from financial institutions, in response to the data requests we outlined in our call for evidence. We also received data from some debt relief charities and made further use of our quarterly participation tracker data and other contextual information such as You Gov statistics. Relevant data has been summarised and is included as part of this consultation.

Why your views matter

We have now considered the responses and the data received to our call for evidence, and what our next steps should be. In summary:

● We are persuaded that there are risks of harm associated with using credit cards for online gambling and that we need to act to protect consumers. We are therefore now consulting specifically on two separate options of either banning or restricting the use of credit cards for all forms of remote gambling ie betting, gaming and lotteries.

● We would like to obtain further evidence about consumers’ motivations for using credit cards to gamble, and any specific benefits of using them. The call for evidence uncovered very little in this regard, but we must take account of the extent of any impact that a ban or restrictions may represent for gamblers who are not experiencing harm.

● Credit cards provide a convenient means of borrowing money to fund gambling and can facilitate high levels of gambling debt eg through maximising credit limits across multiple cards. We propose to introduce measures that will be effective in reducing gambling harms associated with the use of credit cards. The preferred option for most who responded to the call for evidence was to prohibit gambling online with credit cards in order to achieve this aim. We will take the most appropriate course of action in view of any further evidence obtained during this consultation, alongside the data already submitted.

● However, we also acknowledge that there could be unintended consequences if any action on credit cards is taken in isolation. We are concerned that consumers experiencing harm might use other forms of borrowing, such as overdrafts and loans, to fund their gambling in lieu of credit cards. This means that the risks might simply displace to other lending products and that some consumers will continue to experience harm. It is therefore essential that, alongside any action we take, the financial and gambling sectors work to introduce protections for their customers to mitigate the risks of harm from gambling with other forms of borrowed money.

● We note from responses to the call for evidence that where online gambling deposits are made through some e-wallets, the operator has no means of knowing which method the payment originated from (eg whether it emanated from a debit card, a credit card or a separate balance within the wallet). Unless this current lack of transparency is addressed, a prohibition or a restriction on gambling online with credit cards could be easily circumvented by making a credit card deposit into an e-wallet instead of a direct payment to the gambling operator. We will therefore need to prevent gambling operators from accepting any payments via e-wallets unless e-wallet providers can prevent credit cards being used for online gambling through their facilities. Or, in the case of regulatory measures short of a ban, we would need to ensure that any limits or controls on gambling with credit cards can be equally applied to the use of credit cards through e-wallets. We will be writing to e-wallet providers at the start of the consultation and we encourage them to consider, and provide details of, the solutions they can deliver to facilitate any regulatory change.

● We will carefully plan our approach to evaluating the impact of any regulatory change on credit card-funded gambling. We would expect an evaluation to include, for example, an assessment of how successfully the intervention has reduced the risks of harm to consumers while also minimising the impact on those not experiencing harm. We will be prepared to alter or reverse our regulatory intervention if evaluation reveals that the intervention has contributed to adverse or disproportionate unintended consequences.

● We are also consulting on whether prohibition or additional controls should extend to the use of credit cards for non-remote betting. Currently, non-remote betting and remote gambling operators can accept payment by credit card where that payment is made into a customer account. The use of credit cards in all other types of gambling premises is already restricted by the regulatory framework, and a prohibition on the use of credit cards for online gambling would otherwise leave the non-remote betting sector as an anomaly. Given the risks associated with the use of credit cards, we propose that any measures introduced for remote gambling should also apply to non-remote betting.

Our proposals are outlined in more detail in the consultation which can be accessed below.

Licence Conditions and Codes of Practice (LCCP)

We anticipate that we would give effect to a prohibition or restriction on gambling with credit cards through changes to LCCP, and we are therefore also consulting on specific draft conditions and codes that would deliver these measures.

We propose that any changes to LCCP arising from this consultation would take effect in April 2020, subject to reviewing evidence put forward in relation to the lead-in times that gambling operators and payment processors will require to make systemic or technological changes necessary to either prevent or control the use of credit cards.

[1] recently refocused as the Advisory Board for Safer Gambling (ABSG)