Is the UK Gambling Commission Going to Ban Betting with Credit Cards?

The Review of Online Gambling report released by the UK Gambling Commission (UKGC) was full of interesting takeaways as we noted in this post last week. We discussed some of the bigger proposals and interesting industry statistics, but there was also one other thing that has jumped out at us and others following the industry.

In a section titled “Areas of further work” beginning on page six of the report, one thing the UKGC plans to do is “consider whether gambling on credit should continue to be permitted.” That single paragraph portends a possible huge change to the landscape of online gambling. Depending on what the UKGC decides, it could mean the end of one of the most popular deposit methods for online gambling.

The paragraph reads in full:

“Concerns have been raised regarding the offering of credit and allowing gambling on credit cards as it increases the risk that consumers will gamble more than they can afford. We support the principle that consumers should not gamble with money that they do not have and plan to conduct further work on gambling using credit in order to develop a more comprehensive understanding of associated risks. We plan to consult on the options that emerge from this review.”

Reactions to the news that the UKGC may actually consider putting an end to credit card deposits have been mixed. Some people have likened the idea to just another move by the nanny sate attempting to decide what’s best for everyone else, while others applaud the idea because of the obvious dangers associated with gambling on credit.

Your humble author tends to side with the side of more freedom when given the choice, but both sides of this argument have merit. People should expect to have a wide range of free will in a modern Western country (and they should also expect to deal with any consequences of their behaviour).

On the other hand, betting on credit is a bad idea and gambling addiction can also lead to a loss of free will. Extending credit to problem gamblers is unavoidable simply because it is impossible to spot every problem gambler before they deposit with a credit card. Once you open that door for a problem gambler, it can lead to dark places.

No matter which way the UKGC goes on this issue, there will be some negative outcomes. In either case, gamblers will have to take ultimate responsibility for their actions because there is no perfect solution.

Difficulties of Banning Gambling on Credit

Banning the use of credit cards to fund online gambling accounts will not even come close to eradicating gambling on credit. The UKGC itself noted that a credit card ban could just result in gamblers using even riskier means to deposit, such as going to payday loan shops for cash and paying even higher interest rates.

Players would also be able to use credit cards to fund other deposit methods such as certain e-wallets, prepaid cards or vouchers which could then be used to fund a gambling account. It would be an expensive and imperfect endeavor for the UKGC to ask every payment system out there to monitor the source of funds and then successfully block transfers to gambling sites if those funds derive from a credit card deposit.

Some of the bigger e-wallets do already ask customers whether money they’re depositing is going to be used to bet online, but that’s only the biggest e-wallets. It would still require a major overhaul of the online payments industry to constantly monitor for gambling transactions and prevent credit card funds from being used to play.

And even if the UKGC was able to come up with a perfect system to prevent credit cards from being even indirectly involved in online gambling, it still would not stop gamblers from making poor financial decisions. How would the UKGC stop players from simply paying for other purchases on credit so they have enough cash on hand to gamble?

This leads to another point, which is that players have other ways to gamble on credit. The UKGC report notes on page 57 that players can just overdraft their accounts or get a payday loan to gamble on credit and that sites “will usually be aware of customers gambling with borrowed funds only when credit cards are used.” In other words, it might be easiest to diagnose problem gamblers by letting them gamble on credit and then intervene.

If people really are going to find ways to get around a credit card gambling prohibition (and they will), the problem goes way beyond payment methods. That’s simply an issue of problem gambling, which needs to be addressed at the source. A few new rules are not going to stop a problem gambler from finding ways to get trouble.

Plus, there’s also the question of how far we really want to go down this road. The sentiment behind stopping problem gambling is noble, but what type of precedent does it set? What happens if the UKGC finds that it’s not as easy as they thought to stop credit cards from being used even indirectly to fund gambling? Will the UKGC start running credit checks on every gambler? Will there be even more payment method crackdowns? At some point, society must accept some degree of risk if it wishes to remain a free society.

Potential Benefits of a Credit Gambling Ban

On the other side of the argument are a number of potential benefits of the UKGC cracking down on credit card gambling. The most important point is that even though a prohibition would not be perfect, it could still help. There’s no need for it to be so easy to use a credit card to gamble online when there are so many other payment methods such as debit cards, prepaid cards and so on.

It may be true determined gamblers would probably be able to find a way around a credit card prohibition, but even an imperfect roadblock would be likely to stop impulsive decisions. Someone who hits a stretch of bad luck and runs out of cash, for example, may be dissuaded just long enough to think twice about gambling on credit. If it’s not easy to deposit with a credit card, that just might give someone enough time to decide it would be best to call it a night and go to bed rather than to keep on gambling.

The UKGC report also notes concerns of the National Responsible Gambling Strategy, which recommends a credit card deposit ban. The report also notes that gambling with borrowed money is “well established” as a risk factor for problem gambling.

Players who already use credit cards to gamble online should also know that some card issuers treat deposits to gambling sites the same as cash advances. This means you pay a higher interest rate and the interest begins accumulating the second you make that deposit. Even players who don’t have a gambling problem would at least save a little money on interest if a ban was in force.

The UKGC’s gambling report notes this last point as well. At one point, the UKGC report says “the cost of gambling with a credit card is so high that 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.”

Conclusion

The Gambling Commission Review of Online Gambling does a commendable job taking account of the pros and cons, strengths and weaknesses of banning the use of credit cards for online betting. It is difficult to predict where the Commission will come down on this issue, but operators should prepare for any outcome. The Commission has been image-conscious of late and has shown it has no qualms with initiating sweeping changes or levying heavy fines on licensees.