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Consultation response

Changes to licence conditions and codes of practice on the use of credit cards for gambling

Consultation response January 2020

E-wallets

We would remind operators of our position as outlined in the consultation. The condition will impose a responsibility on operators to only accept payments via e-wallets in circumstances where the wallet provider can assure the operator that they can prevent payment for gambling by credit card.

Final wording of new licence condition 6.1.2

Addition of new licence condition 6.1.2
All non-remote general betting, pool betting and betting intermediary licences, and all remote licences (including ancillary remote betting and ancillary remote lottery licences) except gaming machine technical, gambling software and host licences.

1 Licensees must not accept payment for gambling by credit card. This includes payments to licensee made by credit card through a money service business.

We proposed in the consultation to remove social responsibility code provision 3.7.1 from LCCP in the event that a ban on credit card gambling was introduced through the new licence condition 6.1.2. This was because, as licensees would no longer have the option of accepting credit cards, code provision 3.7.1 would be redundant and replaced by the new condition 6.1.2. We will therefore remove this code provision as proposed in the consultation.

Removal of existing Social responsibility code provision 3.7.1
Credit cards

All non-remote general betting licences (except where betting is offered under a 2005 Act casino premises licence), pool betting and betting intermediary and all remote licences, except gaming machine technical, gambling software, host, ancillary remote casino, ancillary remote bingo and remote betting intermediary (trading rooms only) licences

1 Licensees who choose to accept credit cards must:

  • accept payment by credit card for gambling only where that payment is made to a customer account
  • make available for gambling, funds deposited via credit card only after the card issuer has approved the transaction.

Consultation question 6

Do you agree that the Commission should introduce limits, restrictions and control measures on the use of credit cards for online gambling instead of a prohibition on credit cards?

Respondents' views

The RGA and several remote betting and gaming operators were broadly supportive of the concept of introducing limits and restrictions instead of a ban, and supportive of some of the specific measures suggested in the consultation. However, individual submissions from the largest remote operators indicated disagreement among them about the principle of introducing limits, the potential effectiveness of key suggested measures, and the feasibility of delivering them. They emphasized that high development costs and long lead-in times of 6-12 months would be required to put limits into effect.

E-wallet providers also noted that there would be significant technical and development costs associated with delivering a solution to support limits instead of a ban, with lead-in times for development of around 9-12 months being necessary.

Several consumers who have experienced harm from credit card gambling, and members of the public,commented on the concept of limits and controls instead of ban. They were generally of the view that such an approach would be unworkable, as they thought that controls could be too easily circumvented (eg if a limit is reached with one operator, the consumer could go to another operator and deposit via credit card with them instead). Some consumers also did not trust operators to deliver limits and controls effectively enough to limit harm.

Consultation question 7

Do you agree that non-remote betting operators should be included within the code (introducing limits and restrictions instead of a ban) so that they would also have to provide the same measures as remote gambling operators?

Respondents' views

Most non-remote betting operators who responded to the consultation were supportive of an outright ban on credit cards for all forms of betting. A couple of respondents from this sector were against any kind of regulatory intervention and only one was supportive of the concept of limits and restrictions instead of a ban.

As previously mentioned, consumers and members of the public were generally against the concept of limits and restrictions for any sector of the gambling industry and instead preferred a ban on credit card gambling.

Consultation question 8

Do you agree that lottery operators should be included within the code (introducing limits and restrictions instead of a ban) so that they would also have to provide the same measures as other remote gambling operators?

Respondents' views

Among lottery operators and representatives of the lotteries sector who responded to the consultation, most were in favour of a ban on credit card gambling for remote betting and gaming, but none supported a ban on credit card use for lottery participation. Most were against any kind of intervention in the lotteries sector, and only a couple of lottery operators supported the idea of measures to limit credit card payments for lotteries.

Consultation question 9

Do you agree with the wording of the proposed new social responsibility code provision 3.7.3 that would require operators to minimize the risks of harm from gambling with credit cards?

Consultation question 10

Do you agree that the suggestions for specific control measures should be introduced as part of an ordinary code provision 3.7.4 rather than a social responsibility code provision?

Consultation question 11

Do you agree with the wording of the proposed ordinary code provision 3.7.4?

Consultation question 12

Are there any particular control measures you think should be mandated by the Commission so that gambling operators are required to deliver them?

Respondents' views

Around a dozen remote operators and the RGA provided commentary on each of the specific control measures suggested in the draft ordinary code provision 3.7.4. Most remote operators were however against controls that would introduce the most friction into the credit card gambling journey (e.g. delays between deposits and setting limits on credit card deposits). Reasons for their opposition included that such measures would inconvenience too many customers and/or would be too technologically complex to deliver. Please see the following broad summary of the remote operators’ responses in respect of each individual control measure suggested in the consultation.

Suggested measure in draft ordinary code provisionSummary of responses from remote operators
Limiting customers to one active credit card on their account at a time.Most remote operators, both large and small businesses, supported this measure.
Providing a delay between the addition of a new credit card to the account and allowing the first deposit to become available for gambling.Most operators were against the concept
Providing a delay period before every credit card deposit becomes available for use. There was universal opposition to this idea.
Customer-led limit setting on credit card use, with the operator required to prevent any further credit card deposits when a limit is reached.Only a couple of respondents supported this, others were against the concept.
Effectively banning the use of sub-prime (credit-builder) credit cards which are generally held by those with a poor credit history.A number of remote operators were broadly supportive of this concept, but a couple emphasised that they would treat sub-prime cards as higher-risk indicators rather than prevent their use.
Advising customers to check their credit card terms and conditionsMost operators supported this.
Allowing the customer to block credit cards on their account if they so choose.Around half of remote operators supported this.
Providing reality checks to customers on their credit card spend. Limited support
Preventing credit card use for any new customer until the operator had monitored their spend behaviour to assess harm.There was almost universal opposition to this idea.

Some financial service providers were of the view that the limits suggested in the consultation would be ineffective, as neither a ban nor the suggested limits would address the risks from using other forms of borrowing for gambling.

Our position

We consulted on the introduction of a social responsibility code provision which would have established an expected outcome that operators minimise the risk of harm from credit card gambling. We also consulted on the introduction of an ordinary code provision which would have provided a number of means by which operators could achieve that outcome.

We note the various concerns raised by several operators and consumers about the principle of introducing limits instead of a ban, and also the potential effectiveness of each measure suggested in the draft ordinary code. While consumers and members of the public were supportive of a ban on credit card gambling, there was very little support among them for limits and controls short of a ban. Equally, the concerns raised by operators and e-wallets give cause for concern as to the length of time it may take to introduce individual measures that, in isolation, may then have limited effectiveness on reducing gambling-related harm unless combined with other measures to maximise friction in the gambling process.

We are therefore persuaded that limits and controls as suggested in the consultation are likely to have much less of an impact on gambling-related harm than an outright ban on credit card gambling, and we do not intend to pursue this option further.

Consultation question 13

Do you agree that any new requirements or provisions introduced should also apply to credit card transactions conducted through e-wallets?

Consultation question 14

Do e-wallets have the technical capacity to identity and prevent credit card transactions for gambling?

Consultation question 15

In the event of controls and limits being introduced instead of a prohibition, are operators able to apply such controls to credit card transactions made through e-wallets?

Consultation question 16

If operators are not currently able to apply such controls to credit card transactions made through e-wallets, what changes to e-wallets would be required to allow operators to continue to accept payments through e-wallets?

Respondents’ views

The three largest e-wallet providers operating in the gambling market all advised that they can build a solution to support a ban on credit card deposits for gambling made through their wallet facilities. They noted however that there would be significant technical and development costs associated with delivering a solution to support limits instead of a ban.

The Electronic Money Association responded on behalf of most e-wallet providers including smaller challenger businesses. They indicated that solutions to support a ban are generally available to their members, but each member would need to take a view as to whether they would develop a solution to prevent credit card payments for gambling or instead withdraw from the gambling market. They also cautioned that long lead-in times would be necessary to deliver limits and controls short of a ban.

Those who supported a ban argued that it would be essential for a ban on credit cards to be supported by e-wallets, to ensure that the regulatory intervention could not be easily circumvented by simply using credit cards through e-wallets instead of directly through operators.

Our position

We understand that one of the simplest means of preventing credit card payments is for operators (or their payment processors or acquirers) and e-wallet providers to identify credit cards via a card’s Issuer Identification Number (the IIN, the first 6 to 9 digits of the number across the front of a card which allows the merchant or acquirer to identity whether a card is credit, debit or pre-paid, and to identify the issuing bank). The 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 acquirer. We understand that e-wallet providers are also capable of identifying cards by their IIN.

The proposed licence condition would prevent gambling operators from accepting payments by credit card either directly or through a money service business such as an e-wallet. We explained in the consultation this would mean that operators would not be able to accept any payment through an e-wallet unless the e-wallet provider could demonstrably prevent the use of credit cards for online gambling through their wallets.

Where the e-wallet provider allows funds to be transferred from a card into a ‘stored value’ held within the wallet, the provider may need to have separate ‘pots’ of stored value to meet a prohibition on credit card gambling e.g. one pot for payments that the consumer declares will be for gambling and one pot for non-gambling payments; or, one pot for funds that are derived from credit cards and a separate pot for funds derived from any other non-credit payment instrument. In the former example, the e-wallet provider would need to prevent the gambling-bound pot being funded by credit cards (e.g. as identified by the IIN) and prevent the non-gambling pot (which could be funded by credit card) being used for payments to any gambling operator (identified by the ‘7995’ merchant category code for gambling).

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