Feature article - Credit card ban – how it applies to lottery operators licensed by the Commission
In January’s LA bulletin we advised that from April 2020 we will ban gambling with credit cards for all forms of remote gambling and for non-remote betting. We have produced some guidance in response to queries from the lotteries sector on how this impacts them.
This advice will be applicable to large society lotteries, ELMs (external lottery managers) and local authorities that hold a lottery licence with the Commission (this does not apply to the National Lottery or small society lotteries). Please share with relevant council colleagues responsible for running the LA lottery.
From 14 April 2020, the ban on accepting payment by credit card for lottery participation will apply to:
- remote society lottery licences
- remote ancillary lottery licences, and
- remote ELM licences
In practice, this means that lottery operators with one of these licences will no longer be able to accept payment by credit card by remote methods. These include, for example:
- online payments (e.g. by website or an app)
- payment over the telephone
- payment by email
- payment by text message
- payment sent by fax
It will apply to credit card payments from both new and existing customers paying by remote means for either subscriptions or individual entries.
For subscriptions, this applies if:
- taking recurring subscription payments by credit card (e.g. weekly, monthly or annual credit card payments),
- those payments are taken automatically without the customer having to input their credit card details each time, and,
- the customer’s original payment was made by remote means.
Where this is the case, the lottery operator needs to ensure that subscription credit card payments are no longer taken from 14 April onward. Those customers will need to pay by alternative means if they wish to continue to take part in its lotteries.
Credit card payments can be accepted by remote means until 14 April. This includes where payment is made to take part in a lottery draw that takes place after this date. No further credit card payments can be accepted from the 14 April.
Non-remote society lottery (including non-remote local authority lotteries licensed with the Commission) and non-remote ELM licences will however not be subject to the ban.
What this means is that holders of non-remote lottery licences can continue to accept payment by credit card by non-remote methods, including for example:
where payment is taken face-to-face (e.g. on retail premises or door-to-door) where payment is sent by post (e.g. card details are sent to the operator in the post).
How operators might be able to comply with the ban
We understand that one means of preventing credit card payments is for operators - or their payment processors or acquiring bank - to identify credit cards via the card’s Issuer Identification Number (the IIN, which is the first 6 to 9 digits of the number across the front of a card and which allows the merchant or acquirer to identity whether a card is credit, debit or prepaid, and to identify the issuing bank). The payment processor or acquirer, on the operator’s (merchant’s) request, could then ensure that any card identified as a credit card is prevented from moving through the payment gateway.
Some operators may be able to put this system into effect at their end of the payment gateway without the need to ask their processor/acquirer. However, where this is not the case, we would suggest that operators contact their payment processor or their acquiring bank to understand how they could prevent credit card payments.
The ban will also apply to credit card payments made through e-wallets such as PayPal (opens in new tab), for example. We understand that the major wallet providers will be able to put measures into effect to prevent credit card payments for gambling.
However, operators will be responsible for only accepting payments through an e-wallet where the operator is satisfied that the e-wallet provider will prevent gambling payments by credit card from 14 April.
We suggest that societies, local authority lotteries and ELMs also contact any e-wallet providers whose wallets they make available to their customers as a payment option, to ensure they understand how the wallet provider intends to proceed.
Further details on the credit card ban are available in our consultation responses document.
How does the credit card ban affect small society lotteries?
As explained above, the credit card ban applies to all remote lottery operators licensed by the Commission. It does not apply to small society lottery operators that take remote credit card payments. However, local authorities may wish to consider their own Statements of Policy in this area.
What was the Commission’s rationale for banning gambling with credit cards for all forms of remote gambling and non-remote betting?
We acknowledged the consultation responses from the lotteries sector which generally argued that subscription and lower frequency lotteries do not have the same potential rates of loss as other forms of gambling, and that society lotteries are associated with lower incidences of harm.
However, our key concern is that gambling with a credit card can facilitate high levels of gambling debt, and for people at risk of harm this could be a cumulative gambling debt across a number of operators and types of gambling. We note from our research that those who use credit cards for online gambling tend to be highly engaged gamblers who gamble on several different activities - and that while online betting and gaming are the most prevalent forms of gambling activity for them, they are more likely to participate in a full range of gambling opportunities including gaming machines and online lottery participation. Therefore, individuals who are at the greatest risk of harm from credit card gambling may be using their cards across multiple gambling platforms – and accruing more debt than they can afford to repay – across a range of operators and products including lotteries.
In order to minimise the risks of harm to those credit cards gamblers and their families, we therefore decided to include remote lotteries as part of the ban on credit cards alongside other forms of gambling.
Although small society lotteries can continue to take credit card payments (both remotely and non-remotely) after 14 April, local authorities may want to consider their expectations of new and existing small society lottery operators around remote credit card use in their Statements of Policy.Previous page
LA Bulletin February 2020 - Consultations Next page
LA Bulletin February 2020 - Feature article Crime and Harmful Gambling
Last updated: 28 January 2021
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