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The UK gambling regulator this week banned gambling on credit cards, saying it aimed to stop people “gambling with money they don’t have.”
The ban applies to all forms of online gambling except the lottery and kicks in on April 14.
The news was met, by financial markets at least, with a relative shrug. Gambling company share prices briefly dipped a percent or two before rebounding.
According to the UK Gambling Commission, credit cards are “disproportionately used for gambling by individuals who are experiencing harm.”
The regulator said 800,000 people gambled on credit cards in the UK in 2018, equivalent to 8% of all gamblers. It added that 22% of credit card gamblers are problem gamblers.
The data, however, is not overly robust.
The last figure, for instance, comes from a Populus study of 2,000 representative UK adults. One hundred fifty of those adults had used a credit card to gamble online, and 22% of the 150 were classed as problem gamblers.
In other words, a total of 33 problem gamblers using credit cards informed the decision.
Despite the relatively shaky data, the decision was not unexpected. There is an ongoing political and media backlash against the gambling industry in the UK, and the regulator needed to be seen as doing something.
“Most operators knew this was coming and are prepared for it,” said Joe Saumarez Smith, the Chief Executive of gambling consultancy Sports Gaming Ltd. “The industry was foolish not to do this itself. Most people playing on credit cards are more cash strapped than average players and it’s an easy win to ban it.”
There are questions about the effectiveness of a credit card ban. UK operators over the last two years have already been forced to identify and cut off problem gamblers who would be typically bet with credit cards.
“If this was imposed in 2017 it might have had an impact on revenues,” Saumarez Smith said, “but many of those players have already been turned off.”
Irish brokerage Davy estimated the ban was a single-digit revenue risk for UK operators. The broker said the number of people using only credit cards to gamble was much lower than the UKGC’s estimates.
There are also ways around a credit card ban for determined gamblers.
Players can, in many cases, simply fund an e-wallet like PayPal with a credit card then use the wallet to fund their account. Operators have been told to work with e-wallets to stop this, but there are similar circumventions with prepaid cards that are not so easily addressed.
The day after the UK ban was announced, a Spanish consumer rights body called for similar controls in Spain. In fact, nearly every regulated gambling market is trending toward greater restrictions on gambling and more protection for potentially vulnerable consumers.
It’s not inconceivable to think that a similar ban could ultimately be imposed in the US, where it would likely have a much greater impact. Between 15-20% of online gambling deposits in the US are currently made via credit card, roughly double the UK number.
A World Class Payments report additionally found there are roughly 2.9 credit cards per head in the US compared to 0.88 in the UK. While a ban on credit card gambling in the US might not be imminent, it would no doubt be impactful.