Author: Rebecca Spiliopoulos
In this article we provide an update on recent developments on the status of parliamentary and industry reviews considering potential prohibitions on the use of credit cards for gambling purposes. The importance of such reviews has been heightened by the recent COVID-19 influenced growth in online gambling as a form of accessible entertainment, with funding by credit card being a convenient and popular method for making deposits into gambling accounts.
A recent submission by the Australian Banking Association (“ABA”) stated that online gambling now accounts for 55 per cent of all gambling, with 25 per cent of Australian adults having gambled online in the past 12 months.[1]
Current status
Currently, Australians cannot use credit cards when gambling in terrestrial licensed venues, casinos and TAB outlets. However, the same cannot be said for online gambling where credit card use is currently permitted.[2]
Some bank issuers have already independently moved to prevent their customers from transacting with gambling companies using their credit cards. This includes American Express, Bank of Queensland, Bendigo Bank, Citibank, Macquarie Bank, Suncorp Bank and Virgin Money.
There have recently been a number of bodies considering whether the use of credit cards for gambling purposes remains appropriate, particularly following high profile moves in other jurisdictions to prohibit the use of credit cards. For example, in April 2020, the Gambling Commission’s ban on gambling businesses allowing consumers in Great Britain to use credits cards to gamble took effect.
Among the entities considering the issue, the ABA delivered a Report in December 2020. The ABA received submissions from 40 parties, including gambling industry participants, member banks and other interested stakeholders. Although the ABA did not ultimately recommend a particular course of action due to concerns regarding coordinated conduct under the Competition and Consumer Act 2010 (Cth), the Report examines pros and cons associated with proscribing the use of credit cards for gambling services. We outline some of their findings below.
A Parliamentary Joint Committee on Corporations and Financial Services has also been undertaking an inquiry into regulation of the use of financial services such as credit cards and digital wallets for online gambling in Australia. The terms of reference include, among other things, assessing the extent of consumer detriment, the potential for a mandatory industry code, regulatory approaches used in other relevant jurisdictions and the level of existing voluntary bans by Australian financial institutions. Submissions to that inquiry closed on 25 June 2021 with public hearings in August and September 2021.
Most recently, the Environment and Communications Legislation Committee (“Committee”) has been considering the Interactive Gambling Amendment (Prohibition on Credit Card Use) Bill 2020 (“Bill”) introduced by Senator Stirling Griff and referred to it by the Senate on 18 March 2021. The Committee delivered its report in October 2021. We examine their key findings below.
The ABA Consultation Report - Use of credit cards for gambling transactions
In November 2019, the ABA utilized the independent research agency ‘YouGov’ to conduct a survey asking whether Australians agreed or disagreed on using credit cards for gambling. A key finding of the survey was that 81% of Australians thought that the use of credit cards for gambling should be restricted or banned.[3] Another finding of the report was that 30 of the 40 submissions supported the view to prohibit credit card use for gambling. Some of the main reasons behind such a stance is to reduce problem gambling and to ensure for consistent gambling regulation across Australia.
The report also contemplated the reasoning for those who had the opposite opinion. Respondents against such a ban argued that it imposes on personal freedom and that it punishes individuals who are not problem gamblers. Submissions and feedback from the survey also revealed the opinion ‘that banning the use of credit cards does not address the underlying gambling addiction, will not reduce the risk of problem gambling, and in some circumstances may cause more harm as gamblers move to illegal offshore gambling websites.’[4]
Additionally, it was argued that newsagents and lottery charities could be negatively impacted by such a ban. ‘Tabcorp estimated that a ban could reduce the incomes of lottery agents and newsagents by between $17 million and $44 million per year.’[5] Lottery West, the Australian Lottery and Newsagents Association, Tabcorp and some registered lottery charities put forward submissions explaining that lottery ‘products cause minimal harm,’ and for this reason, should be excluded from any ban on using credit cards for gambling transactions.[6]
Overall, as mentioned above, the ABA did not recommend a particular course of action.
The Interactive Gambling Amendment (Prohibition on Credit Card Use) Bill 2020
The Bill would amend the Interactive Gambling Act 2001 (Interactive Gambling Act) to implement a ban on the use of credit cards for betting using certain regulated interactive gambling services. Senator Griff explained that the main purpose of the Bill was to:
The Bill would have created civil penalty and criminal offence provisions for a person who accepted, facilitated or promoted credit card payments for interactive gambling services after the six month transition period, with significant financial penalties of up to $166,500.
Submissions in support of the Bill
Many associations such as the Alliance for Gambling Reform, Customer Owned Banking Association, the Australian Institute of Family Studies, Centre for Health Equity Training, Research and Evaluation and the Salvation Army, have made submissions supporting the Bill with their reasoning aligning with the argument to protect Australians from problem gambling and to also make the rules and regulations for land-based gambling the same as online gambling.[8]
Submissions against the Bill
A number of parties cited concerns with the Bill including Responsible Wagering Australia (“RWA”) and Tabcorp. RWA’s arguments against the legislative change stem from their main position that there 'is no compelling evidence to indicate links between the use of credit cards across online betting platforms and the incidence of problem gambling'. Additionally, arguments were put forward that safeguards are already in place with major online wagering operators and card issuers themselves to protect Australians and that these could be strengthened. [9]
Tabcorp cited concerns within their submission regarding the definition of credit card in the Bill being too broad and recommended that betting vouchers and bonus bets be expressly excluded from the definition of credit card. [10] Tabcorp also identified concerns that the Bill would extend the prohibition to apply to newsagents and lottery agents and their sale of lottery tickets and that such a change could reduce the incomes of lottery agents and newsagents by approximately $44 million per year.[11]
The Committee’s findings
The Committee considered all the submissions and ultimately came to the recommendation that the Senate should not pass the Bill. Though the Committee recognized that individuals using credit cards for online gambling can experience harm, they reported that there is limited research into the ‘drivers and the extent of the potential harm.’ [12] Correspondingly, they argued that such a legislative change could impact an individual’s ‘choice’ and ‘autonomy’. The Committee further stated that as there are still several unintended consequences identified in the Bill, such as the definition concerns pointed out by Tabcorp, these issues should be resolved before passing such an amendment. Aiding their decision against the legislative change was the argument that financial institutions already play a major role in issuing and operating credit cards in accordance with legislation such as the National Consumer Credit Protection Act 2009.
It also should be noted that the dissenting reports from the Australian Greens' and from Centre Alliance Senator Stirling Griff both recommended that the Bill be passed.
Conclusion
Judging from the Committee’s recommendation, it is far from clear that legislative change will occur in Australia in the near future regarding the use of credit cards to deposit funds into online gambling accounts. We await the outcomes of the Parliamentary Joint Committee’s inquiry with interest.
At this stage, and given indicated industry support, a voluntary industry approach in combination with action by credit card issuers appear more likely to bring about change in this space in the short to medium term.
[1] Australian Banking Association, Submission 13, p. 1. See also Environment and Communications Legislation Committee, Interactive Gambling Amendment (Prohibition on Credit Card Use) Bill 2020 (Report, October 2021) page 7-8.
[2] Environment and Communications Legislation Committee, Interactive Gambling Amendment (Prohibition on Credit Card Use) Bill 2020 (Report, October 2021) page 7.
[3] Australian Banking Association, Use of credit cards for gambling transactions (Consultation Report, December 2020) page 5.
[4] Ibid, page 13.
[5] Ibid, page 14.
[6] Ibid.
[7] Senator Stirling Griff, Senate Hansard, 25 August 2020, p. 3946. See also Environment and Communications Legislation Committee, Interactive Gambling Amendment (Prohibition on Credit Card Use) Bill 2020 (Report, October 2021) page 2.
[8] Environment and Communications Legislation Committee, Interactive Gambling Amendment (Prohibition on Credit Card Use) Bill 2020 (Report, October 2021) page 9-12.
[9] Dr Mark Zirnsak, Deputy Chair, Alliance for Gambling Reform, Committee Hansard, 10 September 2021, page 1. See also Environment and Communications Legislation Committee, Interactive Gambling Amendment (Prohibition on Credit Card Use) Bill 2020 (Report, October 2021) page 14.
[10] Tabcorp, Submission 11, page 1-2.
[11] Environment and Communications Legislation Committee, Interactive Gambling Amendment (Prohibition on Credit Card Use) Bill 2020 (Report, October 2021) page 16.
[12] Environment and Communications Legislation Committee, Interactive Gambling Amendment (Prohibition on Credit Card Use) Bill 2020 (Report, October 2021) page 19-20.