UK Regulators to Ban Credit Card Deposits in Online Gaming?

Friday, March 30th, 2018 | Written by April Bergman
UK Regulators to Ban Credit Card Deposits in Online Gaming?

The UK Gambling Commission announced this week it would consider a ban on the use of credit cards in online betting. Early last week, the United Kingdom’s chief gambling regulator said that funding gaming sessions with credit cards “increases the risk that consumers will gamble more than they can afford.”

According to data compiled of UK betting operators, credit cards are used for between 10% and 20% of online deposits. The gambling commission’s report stated that is a bad idea, because, “[Consumers] should not gamble with money they do not have.”

Ending credit card transactions might not stop British gamblers from following that obvious advice. Gambling operators and gaming advocates say a ban on Visa and MasterCard transactions might push people who gamble on credit to take out payday loans — a method of personal debt finance many consider predatory.

Obstacles to Underage Play

The UK Gambling Commission told operators it want them to improve the age verification processes, to keep underage gamblers from using their parents’ identity to gamble. One effect of the credit card ban is to eliminate the easiest way for children to pay for underage gambling.

The commission wants to ban operators from providing “free-to-play” games to children and underage teens. Free-to-play is a legal form of gaming on social media sites, but anti-gaming advocates say such games teach children bad habits about casino games.

Neil McCarthur on Protecting Children

The United Kingdom is facing a rise in youth addiction levels, as well as compulsive gambling among UK college students. A change in tackling “unacceptable marketing and advertising” is up for discussion, though the new director of the commission still has not announced definite policies regarding free-to-play games.

The newly-appointed chief executive of the UK Gambling Commission, Neil McArthur 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.”

DCMS Cites Social Media Casino Games

The Department for Digital, Culture, Media and Sport (DCMS) gave a statement earlier this year on how marketing and advertising of inappropriate games are designed to appeal to the younger demographic through social media has become a huge issue.

The DCMS’s review also pointed out the issue of the use of credit cards. The United Kingdom has a complex regulatory framework for real money gambling, but voters want stricter regulations, especially on fixed-odds betting terminals and betting shops in general.

“Credit Card Gambling Terrifies Me”

Carolyn Harris, a Labour MP who has long campaigned for safer gambling, said of the prospective credit ban, “The thought of credit card gambling terrifies me. Gambling debts already are a major concern not just for the individual, but for their family who pay the price of the consequences.”

“Currently the focus is on the industry and we know big changes are coming. When we have campaigned so heavily to reduce stakes [on fixed-odds betting terminals], to be anything other than critical of such credit card gambling would be unbelievable.”

Danger of Credit Card-Fueled Gambling

The UK Gambling Commission pointed out that those who use credit cards on gambling sites use them as a cash advance. This includes a transaction fee and a high rate of interest tacked on, so the gambler often owes more for the initial amount gambled. As with any other money user, credit cards tend to make people less aware of their spending.

The same that applies to retail purchases applies to gambling. Many who use credit cards on gambling sites usually do not have funds available on hand. If they had they would most likely go for other means of payment that does not result in high interest.

The UK Gambling Commission’s latest report said, “[It is] hard to envisage why consumers would choose to pay in that way, unless it was to gamble with money not otherwise available to them. We will consider prohibiting or restricting the use of credit cards and the offering of credit but will explore the consequences of doing so. For example, the danger of some consumers switching to more risky and higher cost payment methods such as payday loans.”

The law of unintended consequences might apply to some of the same gamblers in the wake of a potential credit ban. Because they might turn to payday loans, they might gamble using far worse lending rates and terms of use.

GambleAware CEO on Maximum Stakes

Mark Eches, chief executive of GambleAware, said a credit card ban likely would help far more gamblers than it might hurt. Eches said, “With no maximum stakes on internet games, some people may find it difficult to limit their gambling and are at risk of serious harm. Being able to use a credit card significantly increases the risk of gambling more than you can afford, so a ban on credit cards online could be hugely beneficial in protecting the vulnerable.”

Deputy leader of the Labour party, Tom Watson called for tougher regulation throughout the online gambling market. Watson told The Daily News, “There’s a strong argument that we shouldn’t use debt to finance gambling and therefore we should be thinking seriously about whether people should be able to use credit cards to gamble at all.”

Tracey Crouch, Minister for Sport and Civil Society, added, “We are committed to ensuring the gambling industry is safe and sustainable. These proposals for additional regulations will strengthen the controls already in place and further safeguard children and vulnerable people from the risks of online gambling.”

UK Gambling Industry

The UK’s regulated online gambling industry is the largest in the world as well as the single largest sector in the British gambling market. The 2017 posted profits of £4.7bn show a 10% increase from the previous year. The online gambling sector does not include the National Lottery or any other lotteries. More than 9 million Britons participate in online gambling. UK anti-gambling campaigners have fought long and hard for restrictions on online gambling sites to prevent people from using their credit cards for gambling.