Changes to licence conditions and codes of practice on the use of credit cards for gambling
Consultation response January 2020
The role of operators in affordable gambling
Gambling operators should continue to work with financial services to understand what measures can be used to better identify customers who may be gambling beyond their means. We also recently strengthened the customer interaction elements of our LCCP (opens in a new tab) which now includes a requirement to take account of our guidance to remote operators (opens in a new tab) and guidance to premises-based operators (opens in a new tab).
We are clear in that guidance that remote operators should have regard to a range of harm indicators including a customer’s account-level payment behaviour which could indicate they are struggling to fund their gambling (e.g. failed deposits, or the use of multiple payment methods such as debit cards, pre-paid cards and e-wallets to fund an account, may suggest that the customer’s gambling is not consistent with what they can afford to spend).
We expect both remote and non-remote operators, as part of their customer interaction and ‘know your customer’ procedures, to consider factors that might indicate that a customer is spending more money on gambling than they can afford.
In meeting our requirements on customer interaction, we would expect operators to take particular account of customers who, for example, are (or appear to be) borrowing money for the purpose of gambling, or who are only able to fund their gambling with borrowed money. If necessary, we will augment our customer interaction guidance with specific reference to the use of borrowed funds.
The use of credit is only one indicator that gambling may be unaffordable. Customers can experience harms from gambling beyond their means without having recourse to borrowing.
Consultation question 2
Do you agree that remote lotteries (society lotteries and external lottery managers (ELMs)) should also be subject to a ban on credit card payments for participating in lotteries?
All of the society lottery operators who responded were against a ban on credit cards for lottery payments, although most supported a ban on credit card use for betting and gaming. They argued that lotteries are less frequent events than for casino gaming, for example, and therefore that the potential rate of monetary loss to consumers is very low.
Society lotteries pointed out that approximately 3% of transactions to buy lottery tickets come from credit cards. Some argued that subscription lotteries (where payment is made monthly or annually for advance participation in lotteries) and low frequency lotteries (eg weekly draws) should not be subject to regulatory intervention as they are lower risk in terms of gambling-related harm. The Lotteries Council and the Hospice Lotteries Association stressed there should be no intervention at all for lotteries as problem gambling among the sector is low.
Around half of all respondents were in favour of banning the use of credit cards for remote lotteries alongside a ban for remote betting and gaming. This group was mainly comprised of individuals who had experienced harm from credit card gambling, members of the public and treatment providers for gambling harm. Many were of the view that lotteries are still a form of gambling where the odds of winning are long, and that allowing any form of gambling on credit will be unhelpful in minimising harm. Some argued that problem gamblers who can only afford to gamble with borrowed money could move to lotteries if credit card payments were still allowed for these products, particularly as there many societies offering lotteries across which someone could spend large amounts of borrowed money.
A number of non-remote betting operators and casino employees also argued that a ban on credit cards should be universally applied to all forms of gambling, including remote lotteries, for consistency as a harm minimisation approach. While most remote betting and gaming operators were against a ban of any kind, they argued that there should be a level playing for any regulatory intervention that is brought in, meaning that whatever regulatory measure is applied to betting and gaming in respect of credit cards should also apply to lotteries.
We acknowledge the consultation responses from the lotteries sector which argue that subscription and lower frequency lotteries do not necessarily lend themselves to the same potential rates of loss as other forms of gambling, due to the requirement to pay in advance to enter lotteries for a number of consecutive weeks, and that lottery events are often no more frequent than weekly draws. We note that only a handful of societies currently offer online scratchcards or high frequency draws.
However, we remain of the view that it would be anomalous to omit remote lotteries from a ban, given the risks posed by gambling with credit cards. Our key concern is that gambling with a credit card can facilitate high levels of gambling debt, which could be cumulative gambling debt across a number of operators and types of gambling.
We note from our tracker data and new 2CV data that those who use credit cards for online gambling tend to be highly engaged gamblers who gamble on several online gambling activities in a four-week period, and that while online betting and gaming are the most prevalent forms of gambling activity among credit card gamblers, such gamblers are more likely to participate in a full range of opportunities including online gambling, gaming machines and online lottery participation.
Therefore, while society lotteries are generally associated with lower incidences of harmful gambling, and many lottery opportunities might ostensibly present a lower risk due to the infrequency of events, those individuals who are at 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.
We understand that some banks do not treat the online purchase of society lottery tickets as a “gambling transaction” (ie the society is not treated as a gambling merchant by the acquiring bank when a customer buys a lottery ticket through that website), meaning that cash advance fees are not charged to a customer if they buy lottery tickets with a credit card. Conversely, other banks do choose to treat societies as gambling merchants for the purposes of online lottery ticket purchases, and the customer buying tickets with a credit card is therefore charged fees. We note above that the charging of credit card fees for gambling transactions can exacerbate consumers’ total gambling debts.
We should confirm however that the Commission has no input into how acquiring banks assign a category code to a merchant, or how card networks such as VISA and Mastercard choose to define “gambling”.
Consultation question 3
Do you think a ban should be extended to non-remote lotteries (where payment for participation in a lottery is made in premises or by post, for example)?
Respondents from the lotteries sector were also against the Commission introducing any measure that would ban or limit the purchase of lottery tickets by credit card by non-remote means (ie including the sale of tickets by post, face-to-face or sold via retail premises). In addition to the arguments outlined above, some lotteries also argued that lottery tickets can sometimes be purchased in shops and it would be very difficult to administer a system whereby the retailer had to refuse to accept payment by credit card for lottery tickets while at the same time continue to permit credit card payments for all non-gambling products that the premises also sells.
As with the responses to the question on remote lottery payments, around half of all respondents were in favour of banning the use of credit cards for non-remote lotteries too, on the basis that allowing any form of gambling on credit will be unhelpful in minimising harm.
We accept that any intervention on non-remote lottery participation by credit card would be problematic in practice. Society lottery tickets and scratchcards can be purchased, for example, from a shop run by the same charity as that promoting the lottery and can also be made available from other retail premises not linked to the charity, such as supermarkets or newsagents (ie similar to how National Lottery tickets can be purchased from retail outlets). In those circumstances, consumers are likely to be purchasing non-gambling products from the charity shop, or buying groceries etc. from the supermarket, alongside any lottery ticket or scratchcard.
It would therefore be very difficult to expect those retailers to prevent the purchase of lottery tickets by credit card when consumers must also be allowed to purchase non-gambling products by credit card. The retailer may not always be able to easily identify whether a customer’s card is debit or credit, and of course any card terminals on the premises would have to be configured to accept both credit and debit cards given that most merchandise on the premises will be non-gambling. We therefore do not intend to extend the ban on credit card gambling to the purchase of lottery tickets by non-remote means.
Non-remote lottery operators (and external lottery managers) are however reminded of the existing social responsibility code provision 3.4.2. which requires, among other things, those licensees to set an upper limit on the value of lottery tickets which may be sold to a person, whether as part of a single transaction or over a period of time, without customer interaction.
Consultation question 4
Do you agree that the Commission should introduce a prohibition on the acceptance of credit cards by non-remote betting operators alongside a prohibition of credit cards for online gambling?
We received responses from 13 bookmakers who operate either from high street premises or from licensed track premises (on course). Most were in favour of a ban on credit cards for non-remote betting, and for all forms of gambling, as a measure to reduce risks of gambling-related harm. Those favouring a ban were mainly smaller independent operators, although two were larger regional operators. The Federation of Racecourse Bookmakers (FRB) also supported a ban.
One bookmaker favoured the introduction of limits instead of a ban and one was against any regulatory intervention, emphasizing that all responsibility should rest with the credit card user. The Racecourse Promoters Association was also against any intervention on credit cards, stressing that a holistic approach to affordability was needed rather than an approach focussed on one payment instrument, and that responsibility should rest with the lender not the gambling operator.
It was noted that two major high street bookmakers said they already do not accept credit cards in their retail outlets.
Most consumers and members of the public favoured a ban for non-remote betting alongside a ban on remote gambling, to ensure that individuals at risk of harm could not simply move to betting shops or tracks to gamble by credit card.
As with remote lotteries, we remain of the view that it would be anomalous to continue to permit non-remote betting operators to accept payment by credit card into customer accounts (as is currently permitted by social responsibility code provision 3.7.1), given the risks posed. We note the support for this measure from several bookmakers who responded to the consultation.
We therefore intend to introduce a ban on the use of credit cards for all non-remote betting. The ban would therefore apply to non-remote general betting operators (this would cover general betting (standard) operators who trade from betting premises and general betting (limited) operators who trade from licensed track premises eg for horse and greyhound racing), pool betting and betting intermediary operators.
Consultation question 5
Do you agree with the wording of the proposed new licence condition 6.1.2 to prohibit gambling online with credit cards (whether the credit card payment is made directly with the operator or through a money service business eg a digital or e-wallet)?
Almost all respondents who agreed with introducing a ban for remote gambling were satisfied with the wording of the draft licence condition. There were no comments disagreeing with the wording save for one operator who suggested that the reference to payments by credit card “through a money service business” should be changed to payment made “by other reasonably identifiable means”.
We intend to proceed with introducing the new licence condition 6.1.2 as drafted in the consultation. We will however clarify that certain remote ancillary licences are to be included within the scope of the condition, namely betting and society lottery ancillary licences.
Betting ancillary licences allow holders of non-remote betting licences to accept bets by means of a telephone or email in certain circumstances. The society lottery ancillary licence allows holders of non-remote society lottery licences to accept payment by remote means up to certain financial thresholds. As these licences permit participation in gambling, and the acceptance of payment, by remote means, it is essential that they are included in the condition to ensure that all forms of remote gambling are included within the scope of the credit card ban.
Remote ancillary licences are only available to holders of non-remote licences. We consulted on applying any regulatory intervention to all forms of remote gambling (ancillary licences are a type of remote licence), to society lottery and non-remote betting operators. As such, any holder of a betting or lottery ancillary licence will have had the opportunity to respond to the consultation.Previous section
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Last updated: 13 April 2021
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