The Interactive Gambling Amendment (Prohibition on Credit Card Use) Bill 2020

25 August 2020

The Interactive Gambling Amendment (Prohibition on Credit Card Use) Bill 2020 aims to minimise the scope for problem gambling among Australians by amending the Interactive Gambling Act 2001 to implement a ban on the use of credit cards for online betting through certain regulated interactive gambling services.

The growth of interactive gambling in Australia has seen many consumers moving away from traditional gambling products to betting online using smartphones, tablets and other digital devices. Australia's high rate of gambling expenditure and adoption of digital technologies makes it imperative that there is strong legislation to minimise and prevent gambling harm.

The Bill prevents gambling operators from accepting payments by credit card, either directly or through other payment methods that rely on an underlying credit card. This is consistent with a similar ban in the UK that came into effect on 14 April 2020.

The Bill creates a criminal offence and corresponding civil penalty provision for a person who accepts, facilitates or promotes credit card payment in connection with an online bet. A separate contravention is committed for each day the contravention continues.

The Bill allows for a transition period of six months before the prohibition comes into effect.

The Australian Communications and Media Authority (the ACMA) will be responsible for enforcement of the prohibition.

The ACMA will undertake a statutory review after three years from commencement of the new provisions. A report will be tabled in Parliament by the Minister and published on the ACMA website.

It is well known that Australians are by far the world's biggest losers when it comes to gambling losses per capita. Australians lost nearly $25 billion in 2017-18, a five per cent increase from the previous year.

Whilst pokies losses still outweigh the losses from sports and race betting, those sports and race betting losses have been increasing. Sports betting losses increased by 16.3 per cent and race betting losses increased by 7.1 per cent in 2017-18, fueled by heavy advertising and the ease and growth of online betting.

The pandemic crisis has only served to further exacerbate the scourge of gambling addiction at a time of heightened stress, anxiety and depression for vulnerable Australians – all stressors for people experiencing gambling harm.

Several online bookies reported large revenue increases during the three months from April to the end of June 2020 as well as an increase in share prices since the global outbreak of COVID-19.

GVC Holdings, the UK-listed parent company of Ladbrokes, announced that its Australian business had performed "exceptionally well" in growing by 76 per cent during the quarter and, at one point, had accounted for half of its global sports business revenue.

PointsBet, touting itself as Australia's fastest growing online bookmaker, which partners with Fox Sports Australia's coverage of AFL, has reported $32 million for the quarter, a 330 per cent jump in revenue on last year.

Analysts are predicting a 65 per cent turnover growth for Sportsbet, with the share price for its parent company Flutter Entertainment more than doubling since the pandemic began.

Despite the temporary suspension of major sport, corporate bookies have still lured more customers online. Online gambling like race betting and sports betting offer the opportunity to place multiple bets frequently and in high sums – heavily promoted via commercial media and through the onslaught of tailored direct marketing to account holders. It's unconscionable.

These numbers are staggering and behind these figures are vulnerable Australians who have lost their life savings, their families, their homes and their hope.

The Australian Institute of Criminology Statistical Bulletin report (No.27) published in June 2020 found the proportion of online gamblers who had increased their spending grew from March (20 per cent) to April (33 per cent).

There are also reports from the superannuation sector that savings taken out in the federal government's COVID-19 early release of superannuation program has been wasted by punters on online wagering.

Currently in Australia credit cards can be used when gambling online but credit cards cannot be used for offline gambling in a licensed gambling venue or casino. There should be no distinction.

Other jurisdictions such as the United Kingdom banned the use of credit cards for online (and offline) betting on 14 April 2020. Key to the UK government's decision was the extensive use of credit cards by those experiencing harm to fund their gambling along with sizeable debts being incurred.

Research shows that people who experience severe gambling harm are far more likely to gamble more money than they can afford, use credit cards to do so and access credit card funds early. The effect is to accelerate the speed and extent to which a person gambles beyond their means.

There is evidence that being in debt compounds harms created by gambling – it often serves as a driver for people to chase their losses and gamble more, which leads to a vicious cycle of more debt and more harm.

A ban on the use of credit cards for online gambling would significantly reduce the extent of harm to people who are vulnerable to gambling harm.

The harms associated with gambling are well known – they can have an impact on social relationships, family relationships, work performance and physical and mental health. This is in addition to financial stress, loss of creditworthiness, chronic high interest debt, homelessness, crime and suicide.

People who experience gambling harm are heavy users of credit cards. The Productivity Commission's 2010 inquiry into gambling found that people who identified as problem gamblers were four times more likely to use credit cards to obtain cash to gamble than those in the still problematic category of low-risk gamblers.

At the time, online gambling was in its infancy and the Productivity Commission was cautious about banning credit cards for online gambling. The evidence linking credit with harm is now much starker and only heightened during this pandemic crisis.

The use of credit cards enables immediate and easy access to credit – allowing people to gamble with money they do not have and often cannot pay back.

A South Australian Centre for Economic Studies (SACES) 2010 study for the Commonwealth Government identified what they called the "problem gambling timeline". The researchers noted that people descending into severe gambling harm use their most liquid and invisible funds first that they have easy access to – credit cards feature early in the timeline.

Removing credit cards from an environment of constant incentives to bet will make a positive contribution to reduce gambling harm and the risk of gambling harm.

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