Aba Consultation Report to Influence Credit Card Gambling

The Australian Banking Association has been at the center of a debate for several years. Should banks ban the use of credit cards for online gambling? Or should the ABA at least strongly recommend the ban?

While the ABA has tried to stay out of it and still makes no recommendations, the organization has conducted surveys and consultations to gauge public and industry opinions. Its most comprehensive report to date is called Every Customer Counts, and the ABA released it in December.

The majority of responses favored prohibiting the use of credit cards for online gambling, similar to the Australia-wide ban on credit cards in land-based casinos and gambling venues. The ABA’s report tackles online gambling, however, and presents arguments for and against…and in between.

Consultation Report

The Australian Banking Association (ABA) received consultation via responses to a survey and via written submissions. Everything pertained to whether or not banks and other financial institutions should allow their credit cards to be used for online gambling.

Currently, the Australian government prohibits the use of credit cards for gambling in casinos, pubs, clubs, and TAB outlets. However, there are no rules regarding online-based transactions because people can use debit cards. This allows gamblers to work around the credit card rule.

In addition, many banks have a difficult time dictating rules pertaining to online casinos in Australia – such as online casino games and internet poker – due to the fact that they are based outside of Australia and not regulated by Australia.

The ABA issued a survey on the YouGov website and on the ABA’s own consultation page, both of which asked five questions:

• What are the risks and concerns associated with gambling with credit cards?
• Should the use of credit cards for gambling be restricted or prohibited?
• If so, should the restriction or prohibition apply to all forms of gambling?
• What are the potential consequences of prohibiting or restricting credit card use?
• If banks implement changes, should there be a transition period for customers?

In total, the ABA received 813 responses between December 2019 and March 2020. In addition, Responsible Wagering Australia (RWA), academics, government agencies, consumer advocates, online gambling companies, and gambling counselors submitted a total of 40 written submissions.

Majority Believe in Banning or Restricting

Those who took the YouGov survey felt the strongest about banning or restricting at 81%, and the written submissions showed 75% support.

From the YouGov survey, these were the numbers among various groups:

• Regular gamblers: 41% for bans, 34% for daily caps, 14% for no restrictions, 11% unsure
• Occasional gamblers: 53% for bans, 30% for daily caps, 6% for no restrictions, 11% unsure
• Never gambled: 61% for bans, 18% for daily caps, 5% for no restrictions, 16% unsure

The written submissions expressed reasons for their opinions in more detail. From those responses, a number of similar opinions emerged in favor of bans and/or restrictions:

• Reduction in problem gambling
• Fewer families incurring high levels of debt they are unable to repay
• Forcing a delay between wanting funds and actually borrowing funds
• Consistency in regulation across all forms of gambling
• Reduction in fees incurred through gambling, such as cash advance fees
• Limiting the ability to chase losses right away

Respondents believed that banks could and should play a role in minimizing potential gambling harm. As the Alliance for Gambling Reform stated, “If someone can’t use their credit card on a poker machine, surely they shouldn’t be able to for online gambling, either.”

Many said that banks must act responsibly and ethically when lending, which would be consistent with responsible lending in other areas and with risk management practices. It would also assume some responsibility for vulnerable groups of the Aussie population more likely to experience gambling harm.

The financially vulnerable populations are in more danger of incurring debt that they will not be able to repay. Those from lower socioeconomic brackets are more likely to ignore the long-term effects of debt in favor of the possibility of immediate financial wins. They often don’t consider the high interest rates and the ease with which their debts can spin out of control.

Finally, one person in a family who incurs credit card debt often shares that debt with other members of his or her family. This puts the entire family in a precarious financial position.

Reasons for No Bans or Restrictions

Those who did feel that banks shouldn’t be in a position to ban or restrict credit card use with regard to gambling indicated several main reasons.

• It infringes upon personal freedoms.
• It punishes people who are not problem gamblers but use credit cards for convenience.
• People may look for alternative funding, such as non-bank lenders or high-risk loans.
• Banning and restricting do not address the underlying issues surrounding problem gambling.

Gambling companies like Tabcorp and GVC told the ABA that they already take extraordinary measures to reduce gambling harm. They use algorithms to detect at-risk behaviors and offer numerous limitations for bettors.

Mostly, people who oppose bans and restrictions via banks claim that a simple ban does little to resolve the underlying problem. If those people are unable to use credit cards, they will often find other, less regulated methods of obtaining credit. Those often carry even higher interest rates and care little about the consumers.

Interestingly, some gambling companies admitted to credit card restrictions potentially hurting their revenue streams. Tabcorp said that a ban could reduce distributions by $10 million per year, which would then impact gambling taxes to the tune of $56 million to $141 million per year.

Any ban or restriction would use a “gambling merchant gambling code,” which could negatively affect newsagents and lottery charities.

Where Does a Ban End?

One point by some of the respondents pertained to the breadth of bans.

• Should a ban extend to large transfers of funds using debit cards?
• Should banks prohibit credit cards for use with ewallets and PayPal?
• Would social casino gambling on platforms like Facebook be included in a ban?
• What about gaming and its differences from gambling?
• Can the government help by increasing safeguards for other credit providers?

Various banks represented by the ABA have already implemented various policies. For example, Macquarie Bank, Citibank, Suncorp, Bank of Queensland, and American Express are some of the banks that ban all gambling codes on credit cards.

Others have offered self-policing for customers with regard to gambling. Some banks offer their customers the opportunity to block gambling transactions or limit spending on such expenditures.

The ABA has already stated that it will not take any specific action, only provide the information to its banks so they may make informed decisions. “The ABA will not be making recommendations or suggestions regarding the restriction or banning of credit cards for gambling.”

Whether the new ABA consultation report impacts any members to implement new rules individually remains to be seen.