Heralding the Credit Card Gambling Ban – All you Need to Know?

Posted by Harry Kane on Saturday, February 15, 2020

The UK Gambling Commission (UKGC) has been particularly busy of late, having introducing a number of new regulations aimed at safeguarding vulnerable gamblers more effectively.

The most striking of these involved a total ban on the use of credit cards to fund account deposits and wagers, with this particular reform expected to come into effect on 14th April of this year.

There’s undoubtedly sound reasoning behind this decision, which has largely been welcomed by responsible gambling lobbyists and the government. But what exactly do you need to know, and how will it impact on the iGaming industry as a whole?

Delving Beyond the Headlines – What You Need to Know About the Credit Card Ban

This decision has followed months of investigation and introspection, which began at the beginning of 2018.

Back then, the UK Gambling Commission (UKGC) announced the safeguarding of potentially vulnerable gamblers as one of its core strategic objectives through 2021, with a key focus being placed on individuals who displayed compulsive or addictive behaviour (in addition to underage players).

At the same time, the regulator issued a detailed report outlining the various ways in which the iGaming market could be made safer for consumers, with the banning of credit cards one of the key topics for discussion.

More succinctly, the Commission asserted that iGaming consumers “should not gamble with money that they do not have”, creating a scenario where the existing payment and transaction guidelines would need a significant overhaul.

The merit of this proposal was borne out by data gathered from the market leading operators in the UK, which confirmed that credit cards were used for up to 20% of all deposits placed online.

This equates to a significant sum of money, especially when you consider that the total GGY for online gambling was estimated at £5.3 billion in the year ending March 2019.

Not only this, but around 10 million Brits currently wager regularly online, and the projected increase in this number over the course of the next few years would most likely raise the percentage of deposits made via credit card.

Over the course of the subsequent two years, the Commission has invited recommendations and suggestions from various members of the public, while also seeking guidance from iGaming operators and other industry stakeholders.

The government Department for Digital, Culture, Media and Sport (DCMS), which was responsible for issuing the £2 FOBT cap, also commissioned its own investigation last spring. It subsequently concurred with the UKGC’s findings, while recommending a significant crackdown on the use of credit cards online.

It should therefore come as no surprise that the Commission has officially banned the use of credit cards to fund online gambling, with the new directive set to be officially rolled out on April 14th.

Interestingly, the only exception to this rule pertains to lotteries that are run for good causes, as these entities also tend to appeal to a different audience and are not linked directly to gambling-related harm.

Not only do lotteries have the lowest problem gambling rate in the UK, but experts also suggested that prohibiting credit card payments would place a “disproportionate burden on retailers”, particularly in instances where tickets were purchased as part of a larger shop.

How Has the Move Been Received?

When announcing the reforms, UKGC Chief Executive Neil McArthur said: “Credit card gambling can lead to significant financial harm. The ban that we have announced today should minimise the risks of harm to consumers from gambling with money they do not have.”

He also raised the issue of credit card charges that are often applied by institutions, which have the potential to exacerbate gambling-related debts and encourage players to chase losses desperately and to a far greater extent.

Current Culture Minister Helen Whately also reaffirmed the government’s support for this measure, citing both the need for action and the responsibility of industry stakeholders to safeguard players’ interest. “Whilst millions gamble responsibly, I have also met people whose lives have been turned upside down by gambling addiction,” she said. “There is clear evidence of harm from consumers betting with money they do not have, so it is absolutely right that we act decisively to protect them.” Many of the market leading iGaming brands have remained tight-lipped on the announcement, although an emerging operator on the Isle of Man has approved of the decision and declared the actions of the regulator as “fully understandable”. The SMP Group also opined that banning credit card use would hopefully reverse the negative impact that gambling can have within local communities while boosting the reputation of the iGaming industry as a whole. Initial studies have suggested that the majority of adults in the UK are also on-board with the decision, despite that fact that may make it harder for them to place wagers. Overall, 55.65% of the 2,000 respondents surveyed strongly agreed with the idea of banning credit card use when wagering online, while a whopping 76.6% supporting the UKGC’s decision overall.

The Last Word – What Will This Mean for the iGaming Market

Despite its obvious merits and almost universal approval, the decision to ban credit cards for gambling purposes may trigger alternative issues in the marketplace. One of the key concerns revolve around the other funding options available to problem and vulnerable gamblers in the modern age, including short-term and so-called ‘payday’ loans. The fear is that players may simply take out such loans to fund their gambling activity on a monthly basis, creating a scenario where borrowed funds could be deposited in their bank accounts and used to place bets undetected. This is a significant concern for Labour MP Carolyn Harris, who’s part of a major campaign to crackdown on gambling companies and believes that the new legislation does not go far enough. Ms. Harris, who’s also part of the cross-Parliamentary Group for Gambling-related Harm and wants to introduce a £2 maximum bet threshold on slot gaming, suggests that the recent reforms should be broadened as part of a complete of the Gambling Act 2005.

This idea is gathering momentum in Parliament, and there’s a reasonable chance that even more stringent payment rules may be introduced at some point over the course of the next few years. However, the UKGC has at least taken decisive action by banning the use of credit cards, while the support of the market leading iGaming brands will reassure the government that the issues of problem gaming are being taken seriously.