Credit Cards & Online Gambling

ABA CEO Anna Bligh’s Opening Statement

Thank you for the opportunity to appear before the committee today.

The Australian Banking Association welcomes this inquiry – as the rise in online gambling accelerates, so too does our understanding of the considerable harm that it causes to some Australians.

Today in Australia, if you’re at a racetrack, in a TAB or at a Casino, you cannot use a credit card to gamble. This ban was put in place by state and territory governments in the early 2000s.

But if you are at a racetrack, in a TAB, or at a Casino – and you have your phone – there’s nothing stopping you logging into your favourite betting app and placing a bet using your credit card.

This anomaly poses a very simple question for this Committee to consider – why are citizens prohibited from doing something in the physical world which they can do with impunity in the virtual world?

In the view of the ABA the answer is also simple – it’s because when the use of credit cards for gambling was banned, online gambling didn’t exist.

Two decades on, online gambling now accounts for the majority of all gambling and is one of the fastest growing forms of gambling.

According to a recent survey by the Australian Gambling Research Centre, before COVID-19, 62% of participants’ gambling was conducted online, and this grew to 78% during the pandemic.¹

In the absence of updated government regulation, ABA member banks have introduced mechanisms to limit the harm that some may experience from the use of credit cards for online gambling.

Most banks have developed technology solutions including tools to track and cap spending and initiate customer directed blocks. Banks have trained customer support teams and provided referrals to support services.

Assistance measures vary across different banks, but can include:

• Immediate gambling blocks able to be activated via banking apps and contact centres.
• Delays on the removal of blocks.
• Credit risk strategies which factor in a customer’s historic gambling activities.
• Gambling transactions being declined when a customer reaches a certain percentage of their credit limit.
• Real-time alerts when customers make high-cost credit card transactions including gambling.
• Low or no-interest credit card products which do not allow gambling transactions.

In 2019 the ABA commissioned a study on the use of credit for online gambling, which found overwhelming support for change. 81% of Australians thought gambling on credit cards should be restricted or banned.

So how would such a ban be implemented?

If a bank institutes a ban – it must introduce a block on payments to the relevant merchant category codes for gambling. The problem is, this international merchant code covers both betting and lotteries including charity lotteries.

So where a bank institutes a block on the relevant merchant code (that is, MCC 7995 – Betting, including lottery tickets, casino chips, off track betting, and wagers at racetracks) it inadvertently bans the use of credit cards for the fundraising activities of charities, including worthy causes like surf lifesaving clubs and hospitals. It may also impact newsagents if lottery sales represent more than half of their business. No longer could these newsagents accept a credit card when a customer buys, say a newspaper, a magazine, and a lottery ticket.

There’s a smarter, simpler and more effective way to do it. Adjust the law to bring it up to date. A simple amendment to the Interactive Gambling Act would make it illegal for an online gambling company to accept a credit card online, just as it is at the track or the TAB.

This approach has been taken successfully overseas, most notably in the UK. It does not require any reliance on merchant codes and does not, therefore, have any negative impact on charities and newsagents.

The ABA notes the announcement from Responsible Wagering Australia that their members have resolved to ban the use of credit for their products. The banking industry welcomes this development and has publicly announced its willingness to assist the RWA to implement the technical solution as soon as possible.

Australian banks recognise the harm caused by the use of credit for gambling. That’s why they have introduced so many significant tools to help their customers.

They stand ready to further assist governments and online gambling companies to update their laws and practices and ensure that Australians are protected from harm.

I’m happy to take your questions.