Gambling Commission recommend credit card ban

3 April 2018   By Angela Moran

The regulator fears the use of credit cards for gambling encourages players to bet money they don't have.

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The recommendation is included in the Gambling Commission's 'Review of online gambling', which sets out a number of ideas that the regulator now plans to consult on in order to change existing regulatory requirements. The aim is to extend the protection that online gambling consumers already have.

The report includes a number of proposed changes for gambling operators, including tightening up the age verification process, improving understanding of customers, tackling unfair terms and conditions, and better identifying customers who may be at risk of harm.

Neil McArthur, Gambling Commission Chief Executive, said: "The proposals we have announced today are intended to protect children better, reduce the risks to vulnerable consumers and build on the measures we already impose on operators to know their customers and intervene at an earlier stage before consumers experience harm."

Gambling industry continues to grow

The report states that since the introduction of the Gambling Act 2014 the UK has the largest regulated gambling industry in the entire world and that gross gambling yield (GGY) is £4.7 billion annually, with growth expected to continue.

The industry has been massively boosted by changes to consumer behaviour that have been brought about by technological advances, such as high broadband penetration, widely available WiFi connections and the use of smartphones and tablets.

All of these things make online gambling readily available to consumers, with bets able to be placed at home or at work with just the touch of a button.

Indeed, the Gambling Commission predicts that over 50% of remote (online) GGY will be generated through gambling operators' mobile channels by 2020, up from 40% currently. They also predict that the online gambling industry will grow from 34% of the overall market at present to 50% (measured by GGY) over the next few years.

Credit card use risky

Problems begin to arise with online gambling when the ease with which consumers can place bets remotely is matched with the use of a credit card to do so.

Once a consumer decides to play with their credit card they risk racking up high levels of debt, particularly because most credit card companies tend to treat gambling transactions the same way they treat cash advances, which means higher interest, no interest-free period and usually a handling fee as well.

Although the regulator itself doesn't currently hold any data on credit card use for gambling, the report states that gambling operators indicate that these payments amount to 10% to 20% of deposits on their websites, which is a significant amount of bets placed with borrowed money.

The Gambling Commission says that the offer of credit for gambling "increases the risk that consumers will gamble more than they can afford" and that they will now "conduct further work on gambling using credit in order to develop a more comprehensive understanding of associated risks."

However, the regulator will not take the decision lightly and has expressed some concern that banning credit card use for gambling could push some people into "more risky and higher cost payment methods, such as pay-day loans".

Indeed, in addition to using credit cards the report notes that some online gambling customers also borrow money from pay-day loans or their overdraft facilities to place bets.

These borrowing methods pose additional problems for gambling operators because they are hard to detect. That's because operators only tend to be aware that bets are being placed with borrowed money when credit cards are used - because the customer has to enter their credit card details to play - unlike money from overdrafts and pay-day loans, which can be used from a debit account.

Close scrutiny of gambling industry

The Gambling Commission's review into online betting comes at a time when the gambling industry is facing close scrutiny from a number of corners.

For example, the Industry Group for Responsible Gambling (IGRG), which is a collaboration of gambling trade associations, announced this month that from the end of June this year each television gambling advert must include for its entirety a responsible gambling message or a reference to gambling charity GambleAware's website, following concerns that these messages were previously not shown on screen long enough for viewers to read.

IGRG Chairman John Hagan said that he hopes the changes "will help to improve the overall tone and content of gambling adverts, especially on television, in a way that will help to raise awareness of the need to gamble safely and responsibly."

Furthermore, earlier this year GambleAware published a report into the use of online gambling with slots and other casino-style games.

Although they didn't measure how participants paid for their bets, in the course of their research, which was provided by 13 operators across one month (January 2018), they discovered a number of concerning points.

For example, despite the fact that the majority of players followed over the course of the month spent comparatively low amounts (less then £50 in the month), a significant number of players (up to 32,000) lost in excess of £1,000.

As the report states, given "typical income levels and spending commitments in Great Britain it is plausible that many of these will have experienced harm" as a direct result of losing such a large amount in just one month.

They also found that online players who 'binged' on betting were the most likely to incur large losses. For example, the highest losses (of more than £5,000 in the month) tended to be connected to players who placed online bets between five and 10 days of the month, rather than those who played daily.

This indicates that the ease of the online gambling environment lends itself to high-cost betting binges, and that these short and intense periods of betting are probably inevitable for many online players, seeing as such losses cannot be sustained all month.

And although the report doesn't look at payment methods, it's likely that 10% to 20% of the bets they assessed were placed with a credit card, as the Gambling Commission report indicates.

Clare Wyllie, Director of Research and Evaluation at GambleAware, hopes that going forward the Gambling Commission will seek more data from operators to get a better picture of the online gambling industry to "enable policy-makers, practitioners and operators to make gambling safer and protect the vulnerable.".

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