July 24, 2019

The Gambling Commission has today announced that, on the back of its recent call for evidence, it will be holding a twelve-week consultation to begin in mid-August on the issue of gambling online with credit cards.

This isn’t unexpected. The Government’s response to the consultation on proposals for changes to Gaming Machines and Social Responsibility Measures in May 2018 (which tucked away some stark messages for the remote gambling sector for those who read beyond the noisier FOBT stake debate) laid a clear path for the Commission to closely examine this issue. In last year’s Report on Online Gambling, the Commission 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.

The direction of travel was clear enough even without today’s blunt starter for ten that “one approach would be to ban gambling online with credit cards”.  Nevertheless (and primarily because due process seemingly remains important even in these troubled political times), the public and all other stakeholders will be consulted on other options, including restricting the use of credit cards.

The Commission has stated that the consultation will also examine:

• Alternative forms of borrowing:if action is taken on credit cards alone then consumers experiencing harm may use other forms of borrowing to fund their gambling, such as overdrafts and loans. It is therefore vital that the financial and gambling sectors work to protect customers from harm where they gamble with other forms of borrowed money.
• E-Wallets:where online gambling deposits are made through some e-wallets, operators have no means of knowing which method the payment originated from. Any future proposals would therefore require e-wallet providers to take the necessary action to support any regulatory measures introduced.
• Further evidence:the Commission wants to obtain further evidence about consumers’ motivations for using credit cards to gamble, and any specific benefits of using them. The call for evidence highlighted very little in this regard. In aiming to prevent harm from gambling with credit cards, the Commission is clear that it must take account of the impact of a ban or restrictions on gamblers who are not experiencing gambling harms.

 Notwithstanding the Commission’s admission that it has little information on the motivations for the use of credit cards (albeit it doesn’t feel like an Airmiles argument will cut the mustard), the ban on the use of credit cards (and the use of e-wallets which, perhaps even more starkly, present affordability challenges) looks virtually inevitable as:

• it fits neatly with the Commission’s focus on protecting not only problem gamblers but those at risk of becoming problem gamblers;
• the arguments deployed by online operators that they are better equipped than land-based rivals (who are already subject to significant restrictions in relation to the use of credit cards) to identify social responsibility issues through data analysis and customer profiling have seemingly not, in the Commission’s eyes at least, been borne out in practice; and
• the continued use of credit cards is likely to complicate the ongoing work being done by the Commission (in collaboration with trade bodies and major online operators) into affordability, the output of which could, in theory, have a more significant impact on online operators.

Although there are encouraging signs of a more cohesive and joined up approach from the major operators in the UK market to deal with raising standards in the sector against the backdrop of ever increasing (and often ill-informed) political and media commentary, there remains a need to “pick your battles”. Instinctively, this doesn’t feel like one of them, and operators will no doubt be considering if they can get any credit themselves with voluntary moves in these area ahead of likely regulatory prohibition.