Gambling Commission

Consultation: Gambling with credit cards

October 01, 2019
Gambling Commission
Consultation: Gambling with credit cards
Chapters
Gambling Commission
Consultation: Gambling with credit cards
Oct 01, 2019
Gambling Commission
Show Notes Transcript
Introduction:
0:00
[Electronic music plays]
Rab Grewal:
0:10
Hello and welcome to a Gambling Commission podcast about gambling with credit cards. In February of this year, we launched a call for evidence about the use of credit cards to fund gambling. We're concerned that gambling with borrowed money can cause harm for consumers by increasing the risk that people will lose more money than they can afford. We support the principle that consumers should not be able to gamble with money that they don't have. Now following that call for evidence, we are now consulting on either banning or limiting the use of credit cards for gambling. And we would like your views. My name is Rab Grewal and I am joined here today by my colleague Peter Rangeley, who is leading on that consultation. So Peter, what responses did we get from our call to evidence?
Peter Rangeley:
0:52
Thanks Rab. We received over a hundred responses to the call for evidence and a range of supporting data from members of the public, debt relief charities, gambling operators, financial services and some individuals who had suffered significant financial harm from gambling with credit cards.
Peter Rangeley:
1:10
Can you tell us a little bit more about what we've learned from this call for evidence?
Peter Rangeley:
1:15
Well, in summary, the data tells us that there are risks of harm associated with the use of credit cards for gambling and we think we need to act to protect consumers. But there are some key points in the evidence that we also need to take account of. For example, we know that just over 800,000 consumers used a UK issued credit card for gambling in 2018. But around half of that number only did so during one month of the year, which means that they didn't gamble with their credit cards very often. And we know that around a third of online gamblers who fund their gambling through credit cards are not currently experiencing harm. So this means that not all credit card gamblers are problem gamblers. And it's important that in introducing any regulatory change, we consider the impacts on individuals who are not currently experiencing harm while also aiming to reduce the risk of harm to vulnerable consumers.
Peter Rangeley:
2:10
Okay. And what else did the evidence tell us?
Peter Rangeley:
2:13
The data indicates that credit cards seem to be more popular than overdrafts or loans as a means of funding gambling, but also that individuals experiencing harm are much more likely than non-problem gamblers to use overdrafts and loans to fund their gambling. So this suggests that there is a risk that some consumers experiencing harm might use products such as overdrafts and loans to fund their gambling if credit cards were banned.
Peter Rangeley:
2:42
Okay. So there might be some unintended consequences of taking action on gambling with credit cards. But what do we know about the risks of harm associated with credit card gambling?
Peter Rangeley:
2:54
Well, we're concerned by the proportion of credit card gamblers who are already experiencing harm. Just over 20% of online gamblers who use a credit card for gambling are likely to be experiencing negative consequences from gambling, such as financial insecurity and increasing levels of debt, for example. And possible loss of control over their gambling. And a further 25% of online gamblers who use their credit cards may be experiencing moderate levels of problems with their gambling leading to some negative consequences.
Rab Grewal:
3:29
Okay. So what does all of this mean in terms of harm to consumers?
Peter Rangeley:
3:33
So what this data is telling us is that while not all credit card gamblers are currently experiencing harm, a very large proportion of these consumers are currently experiencing some levels of problems with their gambling. And a further point is that the data shows that credit cards are being used for online gambling in a manner that could worsen or prolong financial harm. Um, we can see that many people are making multiple credit card deposits for gambling rather than using their credit cards for single one-off transactions.
Rab Grewal:
4:05
Okay. So I understand that there are certain unavoidable charges for consumers, when they use their credit card for gambling. Can you tell me a little bit more about this?
Peter Rangeley:
4:14
Yes. So gambling transactions made by credit card are effectively treated as cash advances. So essentially it's the same as withdrawing cash from an ATM with your credit card. This means that you'll incur a fee when you use your credit card for gambling, typically between 3% and 5% of the value of the deposit. But there is often a minimum fee of around three pounds per transaction.
Rab Grewal:
4:40
So in general, the more individual gambling transactions you make with a credit card, the more times you might incur these minimum transaction fees.
Peter Rangeley:
4:49
Yeah, that's right. It certainly seems that you'll incur at least the three pound fee with every gambling transaction. But there are other costs in addition to these cash advance fees and the amount you deposit with your credit card will probably incur higher interest rates than standard credit card purchases. Plus you'll probably be charged interest from the date the deposit is made. And this contrasts with non-gambling purchases, which usually attract interest-free periods.
Rab Grewal:
5:15
And what are the main conclusions that we've drawn from all this data and how have they informed the consultation?
Peter Rangeley:
5:22
Well, we've concluded that the risks of harm associated with using credit cards for gambling, are significant enough that we need to act to protect consumers. So we're now consulting specifically on two separate options of either banning or restricting the use of credit cards to make gambling deposits. Our key aim is to reduce harm from the use of borrowed money to fund gambling. But at the same time, we're also seeking to minimise the impact on credit card gamblers who are not experiencing harm.
Rab Grewal:
5:50
Okay. So what new evidence or information are you looking for?
Peter Rangeley:
5:54
Well, the call for evidence didn't tell us a great deal about the motivations among consumers for using credit cards for gambling. Quite simply, why do people choose to use credit cards for gambling? And that's the key question that we're interested in. Given the fees and costs associated with credit card gambling, it might be expected that people do use a debit card instead of a credit card whenever they have enough money in their bank accounts. And this would mean that they're devoid the charges I've just described. But there might be benefits to using credit cards for gambling or other reasons why people choose to use them. And we need to understand these better. Our consultation includes specific questions on the motivations for using credit cards for gambling and whether there are any benefits. And we really encourage people who use credit cards for gambling to share their thoughts with us.
Rab Grewal:
6:46
So in summary, not all credit card gamblers are currently experiencing harm, but a large and concerning proportion of credit card gamblers are. What would you like to hear from people who have tuned into this podcast?
Peter Rangeley:
6:58
Well, we're really keen to hear from people, from all people with an interest in this, in this topic generally. But would especially like to hear from people who use credit cards for gambling. In particular, we want to understand the reasons why they choose to use a credit card for gambling instead of using, for example, their debit card to make a payment from their current accounts.
Rab Grewal:
7:19
And how can they provide their views?
Peter Rangeley:
7:21
People can respond to the consultation and we've provided a link to that on the webpage where this podcast is available. We've also opened the link to SurveyMonkey where people can provide their views on why they gamble with credit cards and we'd encourage listeners to use either of those options.
Rab Grewal:
7:37
And lastly, what are the immediate next steps?
Peter Rangeley:
7:40
The consultation closes on Wednesday 6th of November. So we encourage listeners to share their thoughts with us by that date.
Rab Grewal:
7:49
And on that note, thank you Peter for joining me today. Thank you to our listeners, and please don't forget to follow the links to the consultation and the SurveyMonkey and share your views with us.
Outro:
7:59
[Electronic music plays]
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