UKGC’s Look at Credit-Card Ban: Possible but Unlikely

This week’s release by the United Kingdom Gambling Commission of its latest “Review of Online Gambling” include the UKGC’s disclosure that the agency is considering a ban on the use of credit cards for use in funding online gambling accounts. The disclosure was guaranteed to garner both widespread media coverage and a touch of industry anxiety, but a deeper read of the long review suggests that while such an industry-wide ban could happen, it’s unlikely.

First, let’s dig into the context. The disclosure came amid the UKGC’s release of other, more immediate plans regarding UK-facing online services. As with the FOBT-based furor that’s engulfed the UK’s land-based betting shop business, there have been other hot-button concerns for the Gambling Commission to examine. At the top of the list: Finding ways to prevent underage access to any online entertainment that could lead, over time, to online gambling, and to continue to force operators to conduct far more diligence regarding the source of online bettors’ funds.

As for banning the use of credit cards as a means to deposit, it’s a concern, but it didn’t make the Gambling Commission’s top-five list of issues. Read for yourself, directly from the UKGC’s announcement on Monday:

• Further protecting children by banning operators from providing free-to-play demo games until a consumer’s age has been determined
• Improving the speed and effectiveness of age verification processes
• Ensuring operators set limits on consumers’ spending until affordability checks have been conducted
• Tackling unacceptable marketing and advertising and unfair terms, and improving complaints and disputes procedures
• Strengthening requirements to interact with consumers who may be experiencing, or are at risk of developing, problems with their gambling.

Those are indeed valid areas of concern. The protection of children focused on in the top two points isn’t a big deal regarding sports betting; that’s more the purview of online casino offerings — Internet-based slots, in particular — though esports operators also need to pay close attention. The issues regarding affordability checks, addictive-gambling behaviors, and the continuing focus on unacceptable marketing and advertising have much more impact on online books, and the UK sector can expect to see further changes in those areas.

The credit-card thing, however? That was relegated to a second section, not of plans or proposals (read: changes in the governing laws), but of areas the UKGC wants to examine down the road. Here’s the entry that’s caused the noise:

• (The Commission is going to) consider whether gambling on credit should continue to be permitted.

One has to dig into the full online review for more on the situation, and it’s a relatively minor inclusion amid the other hot-topic issues. Here’s the introductory statement from the UKGC on the topic:

Consider whether gambling on credit should continue to be permitted

Concerns have been raised regarding the offering of credit and allowing gambling on credit cards as it increases the risk that consumers will gamble more than they can afford. We support the principle that consumers should not gamble with money that they do not have and plan to conduct further work on gambling using credit in order to develop a more comprehensive understanding of associated risks. We plan to consult on the options that emerge from this review.

Largely, as it relates to problem gambling, that’s basic common sense. Bettors really shouldn’t be betting with money that they don’t have.

Rational minds realize there’s a difference between a normal punter using plastic to put a couple of hundred pounds on an online account (just in ease of transit), and the type of problem gambler that maxes out all his cards trying to chase down losses. The UKGC, to its credit, understands that difference, even as it tries to find a way to parse the situation.

Deep into the larger report, the UKGC digs into the issue a little more, in a section titled “Gambling on Credit”. According to the Commission:

Whilst we do not hold data on the prevalence of gambling on credit cards, operators have indicated that credit card payments can amount to 10% and 20% of deposits. We will consider prohibiting or restricting the use of credit cards and the offering of credit but will explore the consequences of doing so. For example the danger of some consumers switching to more risky and higher cost payment methods such as pay-day loans. Operators may also take some reassurance from the fact that credit cards are only issued by banks following a credit reference check. However, recent research by Citizens Advice suggests that over a million people in financial difficulty have had their credit limits raised without asking, so this should not give operators much comfort.

“Prohibition” is thus a worst-case scenario, and the UKGC admits that banks forcing unneeded credit onto their customers is also a contributory factor. There are other factors in play as well.

Taking it all together, the possible ban on credit cards isn’t quite the immediate, done deal that some headlines and stories suggest. The larger truth probably lies in the Gambling Commission’s ongoing pressure to do proper KYC (Know Your Customer) checks on each and every bettor who deposits more than a nominal, recreation account and who places an abnormal quantity of bets.

On those topics, the UKGC has tried both public shaming of the industry as a whole, plus high-profile announcements regarding the issuing of fines against companies who have failed to conduct that due diligence. Think of this talk of a credit-card ban as another shot over the bow by regulators. It’s one of the things that could be done, but it’s more another form of public pressure being applied against UK-facing operators to be more attentive to those other hot-button issues.

Things could get worse for you, the UKGC seems to be warning the industry, even if the agency might not want to go to such extremes.