UK LEGAL
Safety at the heart of the credit card ban?
Northridge Law’s Melanie Ellis looks at the ramifications of banning the use of credit cards to fund gambling.
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n consumer information provided on its website, the Gambling Commission states that “safety is at the heart of credit card gambling ban” and “it is an important step in protecting the 10.5 million people who gambling online from harm”. However, the recently published results of an independent evaluation of the ban indicate it has done little to prevent those most at risk of gambling harm from gambling with money they can’t afford to lose.
Gambling with borrowed money was highlighted as a risk factor for harmful gambling in evidence from the Responsible Gambling Strategy Board, submitted to the Gambling Commission as part of a 2018 review of online gambling. The risks associated with consumers gambling with more money than they can afford subsequently became a key issue for the Commission, leading to the much discussed “affordability checks” along with a decision to explore the consequences of restricting or prohibiting the use of credit cards for gambling.
Until this time, land based casinos, bingo halls and gaming centres had been prohibited from giving or facilitating the giving of credit in connection with gaming, which prevented them from accepted credit card payments. However, there was no restriction on the use of credit cards to pay for gambling online or in a betting shop. Although representing only 5.7% of deposits into online accounts, evidence from UK
22 SEPTEMBER 2024
Finance showed that around 800,000 people were gambling using credit cards. In early 2019, the Commission launched a call for evidence, which was followed by a consultation exercise later that year. Concerns were raised by some respondents that a ban on the use of credit cards would not prevent people (particularly those most vulnerable to gambling harm) from gambling with borrowed money, as people could turn to other forms of borrowing, which might include pay day loans or loan sharks and create more serious problems for them. Ultimately, a decision was made to proceed with a ban on the use of credit cards for all gambling (with the exception of non-remote lotteries). The Commission stated that, “In pursuing a ban on gambling with credit cards, we are satisfied that the benefits of a ban in reducing the risks of gambling-related harm will outweigh the inconvenience experienced by credit card gamblers who are not at risk of harm.” New licence condition 6.1.2 came into effect in April 2020, under which licensees must not accept payment for gambling by credit card, including payments to the licensee made by credit card through a money service business. The reference to payments through a money service business means that licensees are not able to accept any payment through an e-wallet unless the e-wallet provider can demonstrably prevent the use of credit cards for online gambling though their wallets.
The Commission promised to evaluate the impact of the ban on consumers’ gambling behaviour, including “to assess the extent to which a reduction in harm is offset by consumers experiencing harm from substituting to other forms of borrowing”. In November 2021, the Commission published its internal interim evaluation. It used data from its Online Tracker survey and Consumer Voice research, with additional evidence drawn from banks and other sources. The Commission did not find evidence that the ban on the use of credit cards had led to an increase in consumers gambling with other forms of borrowed money, nor did it find an increase in reports of illegal money lending related to gambling, a spike in money transfers or ATM withdrawals. Overall, nor did it find any significant alterations to consumer behaviour. This research had limitations, including that it covered a period including a number of lockdowns and overall gambling behaviour was reduced. The GC commented that, “Ongoing monitoring of behaviours is important to ensure there is not an increase in harmful forms of funding gambling activity.”
With this in mind, NatCen Social Research was commissioned to conduct a full evaluation of the ban, originally scheduled for completion in early 2023, which the Commission intended to use to inform future policy development. The evaluation covered the period from May 2021 to
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