In March 2018, the Gambling Commission (the GC) published its "Review of online gambling" (the Review). The Review noted that gambling with borrowed money, including with a credit card, was a well-established risk factor for harmful gambling as it significantly increased the risk that consumers would gamble with more money than they could afford to lose.
As a result of the Review, the GC began to explore ways to reduce the harm caused by unaffordable gambling and started to examine the consequences of restricting or prohibiting the use of credit cards for gambling. Following evidence submitted to the GC between February and May 2019, the GC was persuaded that there were risks of harm associated with using credit cards for online gambling and it resolved to take action to protect consumers.
To help it determine what action to take, the GC launched a consultation (the Consultation) between 14 August and 6 November 2019 in which it asked, among other things, whether it should ban or restrict the use of credit cards. The GC published its findings in January 2020 and has announced that a ban on using credit cards for all online and offline gambling (save for lotteries) will come into effect on 14 April 2020. Whilst the GC acknowledges that the ban may have a negative impact on those consumers who do not suffer harm when using a credit card to gamble, it considers the reduction in harm resulting from the ban will outweigh any negative impact.
Lotteries have been excluded from the ban as it was considered the ban would put a disproportionate burden on retailers to stop payments by credit card where tickets were purchased as part of a wider shop, particularly as lotteries are considered to have the lowest problem gambling rate. Instead, the GC requires additional protection for consumers to be put in place for lotteries. By way of example, lottery tickets can still be purchased using a credit card at supermarkets or newsagents, as long as the tickets are bought with other products.
In its findings, the GC reports that the eight respondents to the Consultation in the financial services industry were not supportive of the credit card ban as they were concerned it would not address the underlying causes of gambling harm and may cause consumers to switch to withdrawing cash at an ATM or to use other forms of high-cost short-term lending in order to fund their gambling.
The respondent financial services firms proposed that banks and gambling operators should build on their progress to deliver a more multi-faceted and holistic approach to gambling harms to provide greater support for customers with gambling vulnerabilities. Some suggested measures were customer-led card blocking, voluntary spend limits, incorporating gambling risk into lending criteria, and training on gambling vulnerabilities for staff working in the financial sector. One respondent bank even suggested that banks should use their own customers' data to identify potential risk of gambling harm and that banks should take the lead on intervening to prevent such harm.
The GC's findings recognise that credit cards only form part of the problem and it has emphasised that the ban needs to form part of a wider approach to prevent harm from unaffordable gambling. The GC calls on gambling operators and financial services firms to continue with their efforts to prevent harm to consumers who engage in unaffordable gambling, whether by using other forms of borrowing or by gambling beyond their means without recourse to funding. In particular, financial services firms are encouraged to engage with the Money and Mental Health Policy Institute's programme of work to share good practice and deliver means of reducing harm. As such, we can expect to see further developments in this area, whether regulatory or industry-led, in the coming years.
The impact and effectiveness of these regulatory changes will be evaluated in due course and the GC claims to be prepared to alter or reverse its intervention if the evaluation concludes that it has contributed to adverse and disproportionate unintended consequences.
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