Feature article 1:
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, 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.
Feature article 2:
Crime and Harmful Gambling
We are all familiar with the fact that one of the licensing objectives is ‘preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime’. So, what exactly might that crime look like.
Perhaps the most common occurrence on the high street has been the issues surrounding betting premises, for example violence within a shop either to staff or machines, or the people stood outside the premises causing problems for other shoppers. At the other end of the scale you may have noticed a number of high profile cases brought by the Commission in relation to breaches of the anti-money laundering regulations.
However, there is a lot in between these two ends of the scale, most of which doesn’t make headline news, but certainly demonstrates the wider personal, social and economic costs of harmful gambling.
Perhaps this is best described in general terms by the “pathway to crime” which treatment providers will often refer to.
It runs as follows:
- The person doesn’t have enough access to finance their gambling. They start by borrowing from close friends and family, intending to pay it back. Very often they will not disclose it is for gambling. The money is not paid back, and the sums involved escalate. Eventually that source of money is either insufficient or stops.
- The next step is to use money that should be spent on essentials, such as rent or mortgage payments, food and utility bills, and /or to max out on credit and payday loans. Unsurprisingly this then escalates to a point where another source of funds is required, and forms of criminality emerge. These range from fraudulent use of a relative’s credit card and low-level theft through to major criminal acts, very often against an employer.
Although the majority of these events are unlikely to be reported or are resolved before they reach court here are a few examples of those that have done so.
One recurring theme is how frequently the offenders are in a position of trust, either at work or domestically. In this case a woman was able to steal more than £2m from her employer by paying the cash to an unknown supplier.
Yet people need not be in a position of financial control to commit fraud to fund their gambling as this story of a postman who stole from items on his deliver round illustrates.
These eye-catching headlines are only the tip of the iceberg however they serve to illustrate the point. It should come as no surprise then that the findings from a pilot study of custody suite inmates in Cheshire revealed that they were 13 times more likely to be experiencing problem gambling issues than the population at large.
More generally the relationship between crime and gambling is still poorly understood and it is for this reason that the Commission has approved a regulatory settlement enabling the Howard League for Penal Reform to establish a Commission on Crime and Problem Gambling to ask three questions
- What are the links between problem gambling and crime?
- What impact do these links have on communities and society?
- What should be done?
Over a three-year period, the commissioners will investigate patterns of crime linked to problem gambling, and the societal harms that connect the two, before seeking to make recommendations for government, the gambling industry and within the criminal justice system.
We also information on our website about setting up Betwatch schemes. These local schemes are designed to share intelligence primarily amongst bookmakers (but can be extended to include other gambling establishments) about anti-social behaviour and problematic customers.
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