Credit Provision for Online Gambling

By Ciaran McCormack

February 2019

Through shining a light on the prolific use of credit cards for online gambling, we (in collaboration with other like-minded partners) have driven the largest Australian banks to address this issue over the past three years.

We believe that providing a line of credit for gambling is at odds with responsible lending laws. If someone can’t use their credit card with a pokie machine, surely they shouldn’t be able to for online gambling either. Our most recent round of engagements with the banks to review progress found that they have enacted partial resolutions, although none with an outright ban.

Our engagement campaign has raised the issue to the highest levels within the banks we targeted and has led to improvements in hardship program practices and monitoring of transactions to identify problem gambling. However, the notion that offering credit for gambling is incompatible with responsible lending laws has rarely been made explicit by individual banks, despite the Australian Banking Association’s recognition that credit provision for gambling is problematic.

While all the banks acknowledge that this issue compounds problem gambling, the big four banks are ‘captured’ to varying degrees by the gambling industry or even by charities which may benefit from raffles or lotteries that fall under the gaming merchant category code. ‘Non-captured’ banks (and those subject to US regulation which bans credit card use for gambling) should be willing to put total blocks on the use of credit cards.

All the banks are considering medium to long-term solutions to address problem gambling.

  • Both Westpac and the Commonwealth Bank appear to be ahead of the pack in terms of digital solutions from a customer choice perspective.These include allowing customers to ‘opt out’, or applying real-time friction controls which block the credit cards for 48 hours, for example, in Westpac’s case, and six months, in the case of CBA.
  • While the ANZ and NAB are laggards, in part due to legacy IT systems issues, the ANZ has recently implemented a ‘speed bump’ which puts both a block on the card when 85 per cent of its limit is spent, and a limit on the number of transactions. Our conversations show that the industry as a whole would prefer a wholesale regulatory block.

The industry has also welcomed complementary consumer protection measures to mitigate problem online gambling as outlined in the National Consumer Protection Framework (NCPF).

This comprises a set of ten minimum standards to be applied to the 2.5 million online gambling accounts in Australia and includes:

  • a national self-exclusion register and ability to self-exclude via one click
  • pre-commitment time and deposit limits to control gambling behaviour, and
  • banning of inducements and promotional incentives for new account holders.

While significant progress has been made, U Ethical will continue to use its influence to highlight the link between easy access to credit and problem gambling.

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