An impending ban on using credit cards to fund gambling will have a profound effect on the gambling industry. This is the stark warning from several Australia-facing bookmakers, which includes industry giants Ladbrokes and Tabcorp.
Betting agencies warned banning credit cards for gambling could lead to a 30% fall in betting turnover. This amounts to hundreds of millions of dollars and will directly effect the racing industry in particular.
Dean Shannon, Ladbrokes Australia’s chief executive, said Australia’s racing strength come from returns from betting, which makes it a self sufficient industry.
“Racing is driven by turnover and if you take away the credit cards I would say at a guess it would affect 30 per cent plus of turnover. I think a ban on credit cards would be quite short sighted and the flow on effects that would spin the racing industry into decline.”
Another bookmaker claims approximately 80% of its customers use credit cards for gambling. The do saw because they are convenient and these customers don’t hold debit card accounts.
ABA Considers Banning Credits Cards For All Forms of Gambling
The Australian Banking Association (ABA) released a discussion paper focusing on using credit cards for gambling. The ABA released the eight-page paper on December 5th. It invited the public to submit its view on the topic until March 4, 2020.
Several questions made up the paper, but the five questions the ABA were most interested in were:
- What are the risks and concerns associated with gambling with credit cards?
- Should the use of credit cards for gambling be restricted or prohibited?
- If so, should the restriction or prohibition apply to all forms of gambling?
- What are the potential consequences of prohibiting or restricting the use of credit cards for gambling?
- Should there be a transition period if banks choose to implement changes relating to credit cards?
A blanket ban on using credit cards for gambling transactions seems inevitable. Banks and governments are powerful establishments that usually get what they want. Words coming out of the ABA and from the government revolve around problem gambling.
The claim, rightly in some cases, gambling with a credit card exacerbates problem gamblers’ issues. They make it possible for problem gamblers to continue gambling with money they don’t physically own. This leads to increased debts and creates a vicious circle of gambling outside their means.
Ironically, credit card issuers will miss out on millions of dollars if a ban comes into play. These companies treat gambling transactions as cash advances, which carry an up-front charge and excessive interest payments of 20% or more.
Macquarie Bank Has Already Banned Gambling With Credit cards
Macquarie banned all gambling and lottery transactions on its credits cards from July 1, 2019. Any transactions classified under the merchant codes as gambling are automatically blocked when the user attempts to pay.
The bank said the move was in response to the growing regulator and government concern about problem gamblers having easy access to credit.
Australians are already unable to use credit cards for gambling inside casinos. Pokies in pubs and clubs don’t accept credit card payments either.
Gamblers in the United Kingdom can’t use a credit card for gambling from April 14th this year. It follows a review of online gambling by the country’s gambling commission.
The review revealed 24 million British adults regularly gamble with 10.5 million of those doing so online. An estimated 800,000 Brits use credit cards to fund their gamble be it poker, online casinos, or sports betting.
Separate research undertaken by the UK Gambling Commission revealed 22% of online gamblers using a credit card to gamble are classified has problem gamblers. An even larger number at some risk of harm.
The ban covers all online and offline gambling products, although it excludes non-remote lotteries. Expect something similar in Australia by the end of 2020.