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Regulator consults on online gambling credit card ban

Out-Law News | 14 Aug 2019 | 11:57 am | 2 min. read

Gambling operators could be barred or restricted from accepting credit card payments from their customers under formal proposals being consulted on by the British gambling regulator.

Under the proposals outlined by the Gambling Commission, the operators could also be barred from accepting any payments made by customers from 'e-wallets'.

The proposed changes, which would be built into operators' licensing conditions, could take effect from April 2020.

Gambling law expert Audrey Ferrie of Pinsent Masons, the law firm behind Out-Law, said: "Restrictions or a ban on the use of credit cards for online gambling could have very serious consequences for operators. I don’t think that 'another nail in the coffin' is too strong an expression."

The regulator's consultation comes after it gathered evidence on the issue of gambling via credit cards earlier this year. It said at the time that it would "consider whether regulatory interventions such as restricting or prohibiting gambling via credit cards are necessary" if there is an "absence of effective consumer protections to limit the risks of harm posed".

Now the Gambling Commission has said it is "persuaded that there are risks of harm associated with using credit cards for online gambling and that we need to act to protect consumers". As a result it said it and has decided to formally consult on two separate options of either banning or restricting the use of credit cards for all forms of remote gambling, which covers online betting, gaming and lotteries.

"Credit cards provide a convenient means of borrowing money to fund gambling and can facilitate high levels of gambling debt e.g. through maximising credit limits across multiple cards," the Commission said. "We propose to introduce measures that will be effective in reducing gambling harms associated with the use of credit cards. The preferred option for most who responded to the call for evidence was to prohibit gambling online with credit cards in order to achieve this aim. We will take the most appropriate course of action in view of any further evidence obtained during this consultation, alongside the data already submitted."

A ban or restrictions on 'e-wallet' payments could be imposed alongside action taken against credit card payments to address the fact that there is currently no way for operators to tell where deposits taken from e-wallets come from, the Commission said.

"Unless this current lack of transparency is addressed, a prohibition or a restriction on gambling online with credit cards could be easily circumvented by making a credit card deposit into an e-wallet instead of a direct payment to the gambling operator," the Commission said. "We will be writing to e-wallet providers at the start of the consultation and we encourage them to consider, and provide details of, the solutions they can deliver to facilitate any regulatory change."

The Gambling Commission acknowledged that an unintended consequence of any ban or restriction on credit card payments in online gambling could be that consumers turn to "other forms of borrowing, such as overdrafts and loans, to fund their gambling". It said that, should it take the action proposed, it would be "essential" for financial institutions and gambling operators to "introduce protections for their customers to mitigate the risks of harm from gambling with other forms of borrowed money".

The regulator said that it will consider any evidence submitted regarding the benefits of the use of credit cards by online gambling customers before making a final decision on the action to take.

As part of its consultation, the Commission is also consulting on whether a ban or controls on the use of credit cards should also apply in betting shops.