The difficulties of keeping up with regulatory changes has forced a number of brands to withdraw from the UK market over the past few months and forthcoming changes are likely to drastically alter the market once more.
The use of credit cards in gambling activity, whether that is online or in gambling venues, will be banned completely within the next few months. This and other shifts in the gambling regulation framework could put significant strain on operators keen to remain licensed in the UK.
The ban on credit cards for gambling came about in the wake of a government review of online gambling and how the industry did (or in some cases, did not) uphold its social responsibility obligations.
The review found that the use of credit cards to gamble could lead to significant harm as gamblers spend money they might not be able to pay back, racking up massive debt along the way. The largest gambling operators in the industry, including brands such as Betfair and Bet365 currently allow players to fund their casino accounts through credit cards.
The ban will come into force on the 14th of April of this year and it means that every online casino or gambling venue must remove the option for players to fund their gambling via credit card. The ban covers all sorts of gambling, from sports bets to slots, but it excludes the purchase of National Lottery tickets. The UKGC said that it recognised that retailers may find it challenging to differentiate between credit and debit cards at the point of sale so this activity is exempt from the ban.
While some players use their credit cards to directly fund their casino accounts, others use credit cards to top-up e-wallet accounts that they then go on to use at online casinos. At the minute, the ban only covers credit cards used to fund casino account directly. However, it is worth noting that the same review that the ban is based on recommended similar restrictions on funding e-wallet accounts.
So far, the UKGC has not presented any restriction on the use of credit cards to fund e-wallet accounts but we will have to wait and see whether the Commission decides to crack down on this too.
While credit card users might be smarting over this decision to effectively outlaw their payment method of choice, the statistics the UKGC is working off of make a compelling argument. Roughly 24 million British adults gamble with some 800,000 of those making use of credit cards to fund their gambling activities in 2018.
The ban on credit cards is meant to minimise the potential damage that vulnerable gamblers may face. Not only do they risk overspending by using what some people erroneously see as ‘free money’ but they are also putting themselves in a difficult financial situation when they find they cannot afford to repay their debts and the interest and fees start to mount.
Neil McArthur, CEO of the UKGC, said that gambling with credit card funds can put people at risk of “significant financial harm” and the ban was aimed at reducing that risk. He went on to report that research showed that 22% of online gamblers who use credit cards are in fact problem gamblers. There have been many cases of players accumulating tens of thousands of pounds in debt because it was so easy to keep playing with credit card funds.
While the credit card ban made headlines when it was announced, the UKGC actually introduced a number of upcoming changes. GamStop, the system that allows players to self-exclude from gambling online, will be an obligatory licensing criterion. This means that UKGC license holders will have to sign up to the scheme if they want to keep their license and potential licensees will be required to do so before a license is issued.
Another big change is on the horizon for the Gambling Act. The current legislation is based on a set of laws enacted in 2005 and the Tory government has promised a reform and modernisation that reflects the gambling industry’s new landscape and the challenges that regulators now face.