Report
Prohibition of gambling on credit cards
This report focuses on research conducted around the prohibition of gambling on credit cards
Contents
- Executive summary
- Background and approach
- Methodology and limitations
- Operator Implementation and customer behaviour
- Credit cards and digital wallets
- Deposits prior to the introduction of the ban
- Displacement to other high-cost credit sources
- Displacement to illegal sources of funds
- Bypassing the ban through other behaviours
- Displacement to unlicensed gambling sites
- Inconvenience to leisure gamblers
- Conclusions and next steps
- Appendices
Bypassing the ban through other behaviours
- Metric
- Gamblers don’t bypass the ban through credit card cash withdrawals, layering funds through wallets or using pay-later phone billing methods
- Concern
- Although there are legal methods of bypassing the ban on gambling with credit card funds, a widespread adoption of them would undermine the ban’s efficacy
- Assessment
- Awareness of workarounds is reasonably high, but far more people who previously gambled with a credit card now gamble with available (not borrowed) funds than other types of borrowed money
Figure 3. How past 12 month credit card gamblers have changed how they fund their gambling since the ban
| I gamble with money that is available to me (i.e. not with borrowed money) | I gamble with other types of borrowed money instead of a credit card (e.g. loans, overdraft etc) | |
|---|---|---|
| Yes - as a result of the credit card ban | 49% | 15% |
| Yes (both) | 2% | 0% |
| Yes - as a result of something else (e.g. saving money, unemployment, furlough etc) | 20% | 9% |
| No | 29% | 76% |
Nearly half (49%) of the tracker survey respondents who had previously gambled on credit cards and reported that they have changed how they fund their gambling now gamble with available (not borrowed) funds. A minority (15%) have reported that the ban has resulted in them gambling with other types of borrowed money.
Three quarters (76%) of previous credit card gamblers do not gamble with other types of borrowed money.
Caution should be used when considering findings with very low base sizes, but of the 15% (n=17) that had gambled with other forms of borrowed money as a result of the ban:
- there was a high level of gambling engagement. All 17 were moderate-risk or problem gamblers and the majority (n=13) had gambled on 7+ activities in the past four weeks
- four of this cohort reported using a payday loan
- one reported using a mobile phone account to gamble, having not previously done so
Of the 76% (n=103) that had not gambled with other forms of borrowed money since the ban, there was a spread of scores across the PGSI: 15% were non-problem gamblers, 24% were low-risk gamblers, 34% were moderate-risk gamblers and 27% were problem gamblers.
Figure 4. When those that had gambled with borrowed money in the last 12 months had done so (either before the ban, after the ban or both).
| Before April 2020 (i.e before the credit card ban came into force) | Both before April 2020 and since April 2020 | Since April 2020 (i.e. when the credit card ban came into force) | Base Size | |
|---|---|---|---|---|
| Direct Credit | 49% | 19% | 31% | 180 |
| Indirect Credit | 28% | 22% | 49% | 81 |
| Overdraft | 37% | 37% | 26% | 85 |
| Payday Loans | 28% | 22% | 50% | 39 |
| Other Loans* | 29% | 25% | 46% | 24 |
| Family and Friends | 35% | 38% | 27% | 73 |
| Mobile Phone Account | 37% | 33% | 30% | 47 |
For use of borrowed funds for gambling, the use of loans will continue to be monitored, as will the methods that currently have small sample sizes.
All those that reported direct credit card use also reported in-person purchases of NL draw and scratchcard tickets, which is permitted with credit cards and therefore would not constitute a bypassing of the ban.
Bank Data:
We have seen earlier that there was no identifiable shift towards ATM withdrawals from credit cards at the time that the prohibition on gambling with credit cards was introduced. We have also been informed by the same major high street bank that there was no identifiable shift towards money transfers amongst those that had previously gambled on credit cards, which suggests that funds are not being commonly layered through wallets.
Consumer Voice Research:
The research explored attitudes and the likelihood of displacement to indirect sources of credit. Respondents showed a reasonably high awareness of the legal workarounds, such as withdrawing funds using a credit card by ATM to deposit into current accounts, or making a transfer from a credit account to a current account.
Some respondents reported that they were still funding gambling directly with a credit card, but further enquiries identified that the funding behaviour was actually indirect use of cards. Some examples are in the following paragraphs.
Consumer Voice Research
The Consumer Voice Research explored methods being used by those who reported that they were still using credit cards to gamble. The most common methods were:
- money transfers from a credit card account into a debit account
- using credit cards to withdraw cash, which was then either deposited into the debit account or used directly for gambling
- using a credit card for (non-gambling) expenses, whilst using an overdraft for gambling – instead of the other way around.
Quote
"When the ban came into effect, I simply changed my method of payment to a debit card. Nowadays, I transfer money from my credit card to my current account. So my method of payment is exactly the same as it was before the ban. I just present it differently to the provider." (Male, 52, PGSI 1-2)
Quote
"I have only lifted money from the ATM about 5 times due to needing money before getting paid at the end of the month as I use my bank card all the time. I did put the money I had lifted into my bank." (Female, 49, PGSI 3-7)
Quote
"I have gone overdrawn and paid for shopping on my credit cards where I would never normally do this – this has been a result of COVID and the ban on credit cards." (Male, 47, PGSI 3-7)
References
* Indicates low base size n<30
Prohibition of gambling on credit cards - Displacement to illegal sources of funds Next section
Prohibition of gambling on credit cards - Displacement to unlicensed gambling sites
Last updated: 15 January 2024
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