In 2018 the Responsible Gambling Strategy Board (RGSB) provided advice to the Gambling Commission on reducing harm to gamblers. The advice noted that gambling with borrowed money, including with a credit card, is a well-established risk factor for harmful gambling. The Gambling Commission stated that people should not gamble with money they do not have.
To help with a better understanding of the problem the Commission is seeking information from stakeholders including operators and financial institutions on the topic of credit cards. The consultation will last for twelve weeks.
About six percent of gamblers use credit cards to bet on the internet, and eleven percent use wallets. Whether those that use wallets fund them with credit cards or debit cards is not widely known.
Gamblers that GBGC has talked to largely use debit cards but some prefer credit cards because it offers a layer of security that debit cards do not.
We live in an age of cyber-attacks from hackers and databases at large companies have been hacked, with usernames and passwords stolen. A credit card, with a credit limit, where the consumer can decide the amount of credit required, means that a hacker would be restricted to stealing up to the credit limit, less what has already been spent.
With a debit card your life savings could disappear.
The real problem for the e-gaming sector is the attitude that will be taken by the banks if credit cards are to be banned from use in e-gaming transactions. All betting transactions carry an identification code (7995) so they are isolated from other consumer purchases.
The major banks Lloyds, HSBC, RBS, Barclays generally do not open accounts for internet gambling companies. Established operators may have accounts but start-ups and SMEs are not being entertained by the major banks.
This has led many to go to banks in the BB credit rating rather than the preferred AA.
It seems likely the Gambling Commission will decide to ban the use of credit cards for e-gaming. The fear is that the banks will respond with a blanket ban on all 7995 transactions, including debit cards as well. It is an easier solution than exposing themselves to the risk of having their cards used for e-gaming.
Given the exorbitant fines levied upon the banks these days, they will no doubt weigh the risk but any culpability on the part of the banks to enforce the credit card ban could cause them to block all 7995 payments.
The credit card ban could be one of those policy decisions that has unintended consequences.
By Warwick Bartlett