The UKGC has concluded that the risk of harm associated with the use of credit cards for gambling is so significant that they had to act and protect the consumers. Namely, the data points out that there are many risks associated with the use of credit cards for gambling, and the goal of the UKGC is to reduce that risk caused by using borrowed money for gambling.
At the moment, there are two options; one of them is an outright ban on the use of credit cards for gambling activities, while the other one is to limit and restrict the use of credit cards for gambling. However, things are easier said than done as there are many other factors to be considered.
For example, in 2018, more than 800,000 Britons used credit cards issued in the UK for gambling-related activities. Out of that number, only half of the consumers used them throughout the year, while the other half used them during a single month, which indicates that not all credit card gamblers are at risk.
Therefore, the UK Gambling Commission will also have to minimise the impact their decision will have on gamblers who are not experiencing any troubles from using credit cards for gambling.
While not all consumers are facing financial troubles when gambling with credit cards, the data revealed that many consumers have made multiple credit card deposits to gamble rather than making a single transaction.
What’s more, the information has shown that more than 20% of online gamblers who use credit cards for gambling are likely to be experiencing negative consequences such as increasing levels of debt or financial insecurity, as they are gambling with borrowed money.
In other words, an outright ban on the use of credit cards for gambling may not resolve any issues since it will only lead to other potential problems, such as consumers using overdrafts and loans for gambling-related activities.
Furthermore, gamblers can also use their credit cards to fund e-wallets and operators have no means of knowing which method of payment was used for funding online casino or sportsbook accounts. For this reason, all future proposals will require e-wallet providers’ co-operation and support concerning any regulatory measures.
Before making the decision, the UK Gambling Commission wanted to understand why consumers use credit cards for gambling in the first place. Namely, each gambling transaction made via credit cards is treated as a cash advance. In other words, it is the same as withdrawing cash from an ATM, which incurs a 3% to 5% fee, with a minimum fee of £3 per transaction.
In that regard, using a debit card is much more appealing than using a credit card, which is why the UKGC carried out a survey to find out why consumers choose to use credit cards.
After taking the input from the industry stakeholders and the public into account, the gambling industry in the UK might go through significant changes. Furthermore, the effects of the decision made by the UKGC will spread throughout the entire gambling industry since the decision will affect every operator in possession of the UK Gambling Commission’s license.