Credit cards

An update on using credit cards to gamble online in Australia

In this article, we provide an update on recent developments regarding the state of parliamentary and industry reviews regarding potential bans on the use of credit cards for gambling purposes. The importance of these reviews has been reinforced by the recent COVID-19 influenced growth of online gaming as an accessible form of entertainment, with credit card funding being a convenient and popular method of making deposits into gaming accounts.

A recent submission from the Australian Banking Association (“ABA”) said online gambling now accounts for 55% of all gambling, with 25% of Australian adults having gambled online in the last 12 month.1

Actual status

Currently, Australians cannot use credit cards when gambling at licensed land-based venues, casinos and TAB outlets. However, the same cannot be said for online gambling where credit card use is currently permitted.2

Some bank issuers have already taken independent action to prevent their customers from transacting with gambling companies using their credit cards. This includes American Express, Bank of Queensland, Bendigo Bank, Citibank, Macquarie Bank, Suncorp Bank and Virgin Money.

A number of bodies have recently reviewed whether the use of credit cards for gambling purposes remains appropriate, particularly following high profile moves in other jurisdictions to ban the use of credit cards. For example, in April 2020, the Gambling Commission’s ban on gambling businesses allowing UK consumers to use credit cards to gamble came into effect.

Of the entities reviewing the matter, the ABA delivered a report in December 2020. The ABA received submissions from 40 parties, including gambling industry participants, member banks and other interested stakeholders . Although the ABA ultimately did not recommend any particular course of action due to concerns about coordinated conduct under the Competition and Consumer Act 2010 (Cth), the report examines the associated pros and cons banning the use of credit cards for gambling services. We describe some of their findings below.

A Joint Parliamentary Committee on Business and Financial Services has also undertaken an inquiry into the regulation of the use of financial services such as credit cards and digital wallets for online gambling in Australia. The terms of reference include, among others, the assessment of the extent of harm to consumers, the possibility of a mandatory industry code, regulatory approaches used in other relevant jurisdictions and the level of voluntary bans. existing by Australian financial institutions. Submissions to this survey closed on June 25, 2021 with public hearings in August and September 2021.

More recently, the Committee on Environmental and Communications Legislation (“Committee”) considered the Amendment relating to the interactive game (prohibition on the use of a credit card) Bill 2020 (“Bill”) presented by Senator Stirling Griff and returned by the Senate on March 18, 2021. The Committee delivered its report in October 2021. We review their key findings below.

The ABA Consultation Report – Use of Credit Cards for Gambling Transactions

In November 2019, the ABA commissioned independent research agency ‘YouGov’ to conduct a survey asking whether or not Australians agree with the use of credit cards for gambling. A key finding of the survey was that 81% of Australians believe the use of credit cards for gambling should be restricted or banned.3 Another finding of the report was that 30 out of 40 submissions supported the idea of ​​banning the use of credit cards for gambling. Some of the main reasons behind such a position are to reduce problem gambling and ensure consistent gambling regulation across Australia.

The report also considered the reasoning of those who held the contrary opinion. Respondents against such a ban argued that it infringes on personal freedom and punishes people who are not compulsive gamblers. Survey submissions and comments also revealed the view ‘that banning the use of credit cards does not address underlying gambling addiction, will not reduce the risk of problem gambling and, in certain circumstances, can cause more harm when gamblers turn to illegal offshore gambling websites.’4

Additionally, it has been argued that newsagents and lottery charities could be negatively impacted by such a ban. “Tabcorp estimated that a ban could reduce the revenue of lottery agents and newsagents by $17 million to $44 million a year.”5 Lottery West, the Australian Lottery and Newsagents Association, Tabcorp and certain registered lottery charities submitted submissions explaining that “lottery products cause minimal harm” and for this reason should be excluded from any ban on use credit cards for gambling transactions.6

Overall, as mentioned above, the ABA did not recommend any particular course of action.

The Interactive Gaming (Credit Card Ban) Amendment Bill 2020

The Bill would amend the Interactive Gaming Act 2001 (Interactive Gaming Act) to implement a ban on the use of credit cards for betting using certain regulated interactive gaming services. Senator Griff explained that the main purpose of the bill was to:

  • ‘minimize the extent of problem gambling among Australians by [banning] the use of credit cards for online betting through certain regulated interactive gaming services”; and
  • “Prevent gambling operators from accepting credit card payments, either directly or through other payment methods that rely on an underlying credit card.” seven

The bill would have created civil penalties and criminal provisions for a person who accepted, facilitated or encouraged credit card payments for interactive gaming services after the six-month transition period, with significant financial penalties that could reach $166,500.

Submissions in support of the bill

Numerous associations such as the Alliance for Gambling Reform, the Customer Owned Banking Association, the Australian Institute of Family Studies, the Center for Health Equity Training, Research and Evaluation and the Salvation Army, made submissions to the support for the Bill, with their reasoning aligning with the argument that to protect Australians from problem gambling and also make the rules and regulations of land-based gambling identical to those of online gambling.8

Submissions against the bill

A number of parties have raised concerns about the bill, including Responsible Wagering Australia (“RWA”) and Tabcorp. RWA’s arguments against legislative change stem from its primary position that “there is no compelling evidence indicating links between the use of credit cards on online betting platforms and the incidence of problem gambling”. In addition, arguments have been made that safeguards are already in place with major online betting operators and card issuers themselves to protect Australians and that these could be strengthened. 9

Tabcorp raised concerns in its brief about the bill’s overly broad definition of credit card and recommended that betting vouchers and bonus bets be specifically excluded from the credit card definition. ten Tabcorp also identified concerns that the bill would extend the prohibition to apply to newsagents and lottery agents and their sale of lottery tickets and that such a change could reduce agents’ revenue. lottery and newsagents about $44 million a year. 11

The Committee’s conclusions

The committee considered all submissions and ultimately came to the recommendation that the Senate should not pass the bill. Although the committee acknowledged that people using credit cards to gamble online may suffer harm, it noted that there is little research on the “factors and extent of potential harm”. 12 Accordingly, they argued that such a legislative change could impact an individual’s “choice” and “autonomy”. The Committee further stated that since there are still several unintended consequences identified in the bill, such as the definitional issues highlighted by Tabcorp, these issues should be resolved before such an amendment is passed. The argument that financial institutions already play a major role in issuing and operating credit cards under laws such as the National Consumer Credit Protection Act 2009.

It should also be noted that dissenting reports from the Australian Greens and Central Alliance Senator Stirling Griff both recommended that the bill be passed.

Conclusion

Judging by the Committee’s recommendation, it is far from clear that legislative changes will occur in Australia in the near future regarding the use of credit cards to deposit funds into online gambling accounts. We await with interest the results of the joint parliamentary committee’s investigation.

At this point, and given the industry’s indicated support, a voluntary industry approach combined with action by credit card issuers seems more likely to bring about change in this space in the short to medium term.