Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697633731265.pdf (Australia)
25 June 2021 Committee Secretary Joint Parliamentary Committee on Corporations and Financial Services PO Box 6100 Parliament House Canberra ACT 2600 corporations.joint@aph.gov.au Dear Committee Secretary, Regulation of the use of financial services such as credit cards and digital wallets for online gambling in Australia The Australian Banking Association (ABA) advocates for a strong, competitive, and innovative banking industry that delivers excellent and equitable outcomes for customers.
The ABA supports appropriate access to credit for customers to support their long-term prosperity while taking extra care of customers experiencing vulnerability.

In this context, the ABA has recently considered the use of credit cards for online gambling.

The use of credit cards for gambling on poker machines in licensed venues, TAB outlets and at racing tracks was banned by state and territory governments in the early 2000s.

These bans were instituted by placing conditions on gambling licences.
However, these bans did not extend to online gambling as it wasn’t widely accessible in Australia at the time.

Two decades on, online gambling now accounts for the majority of all 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 Online gambling is the fastest growing segment of the Australian gambling market.
Of those who gamble, the proportion betting online doubled between 2012 and 2018.

Annual spend on online gambling is estimated at $3.5 billion2 and those who gamble online have been found to experience higher rates of gambling-related harm3.

Existing consumer protections 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 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.
1 https://aifs.gov.au/agrc/sites/default/files/publication-documents/2009 gambling in australia during covid-19.pdf 2 Roy Morgan Gambling Currency Report (2020) 3 National Consumer Protection Framework for Online Wagering: Baseline Study Report (2019) Australian Banking Association, PO Box H218, Australia Square NSW 1215 | +61 2 8298 0417 | ausbanking.org.au 1 Regulation of the use of financial services such as credit cards and digital wallets for online gambling in AustraliaSubmission 13 To better understand the use of credit for online gambling, the ABA undertook a consultation in 2019 to seek community views.
The three-month consultation included a YouGov representative sample survey as well as a short-form survey on the ABA website.

Stakeholders raised a range of views for and against restricting the use of credit for online gambling.

However, an overwhelming majority of respondents supported further restrictions.

A copy of the report is enclosed for the Committee’s consideration.
The Competition and Consumer Act 2010 prohibits businesses and their industry associations from reaching agreements or understandings about matters on which they compete, such as in relation to prices for products or services, the design features of those products and services, the ability to offer a product or service, or arrangements for certain customers.

Therefore, member banks will individually consider the results of the consultation.
Legislative solutions In Australia, the Interactive Gambling Act 2001 sets the rules for companies that offer or advertise gambling services covering gambling that takes place online, through a website or app or via a telephone.

The Federal Government made amendments to the Act in 2017 which included preventing gambling operators from offering or enabling lines of credit to their customers.
Submissions to the ABA consultation pointed out that a credit card cannot be used at a TAB, in a casino or at the track, but can be used for online gaming, including to transfer money from a credit card into an online app to gamble, and that it would be appropriate for the government to update the Interactive Gambling Act to apply equally to gambling in physical premises and online.

The Act could be amended to prevent registered online gambling companies from accepting payment by credit.
The amendment could be phased in to allow people time to transfer their online gambling accounts to a debit card.

A legislative solution has the additional advantage of avoiding any possible impact on charitable lotteries.

If a financial institution bans using their credit cards for gambling, it must introduce a block on payments to the merchant category code for gambling (MCC 7995 – betting, including lottery tickets, casino chips, off-track betting, and wagers at racetracks).
The ABA consultation identified that this may affect the fundraising activities of some registered charities that sell lottery tickets, for example, the Mater Hospital, Kids Helpline and Surf Life Saving Australia.

It may also potentially affect some newsagent operators who derive a significant share of income from lotto tickets.

These unintended consequences would not arise in the case of a legislative solution similar to the one recently enacted in the United Kingdom.
A mandatory industry code Implementing a ban via a financial industry code or a ‘mandatory code of conduct’ (under the Corporations Act) would give rise to the same unintended consequences outlined above.

A code of conduct would require banks to block payments to the merchant category code for betting.

Industry codes such as the Banking Code of Practice only apply to and bind subscribing ABA members, not other card issuers.
In addition, changes to codes such as this have a long lead time and would require exemption from the Competition and Consumer Act 2010.

A mandatory code of conduct requires prescription and declaration by regulations, and, like other industry codes, has the limitations and unintended consequences of targeting the payments sector, rather than the gambling industry.

For simplicity in regulation, bans relating to gambling and credit are better managed through the Interactive Gambling Act 2001.
Australian Banking Association, PO Box H218, Australia Square NSW 1215 | +61 2 8298 0417 | ausbanking.org.au 2 Regulation of the use of financial services such as credit cards and digital wallets for online gambling in AustraliaSubmission 13 Regulation of the use of financial services such as credit cards and digital wallets for online gambling in AustraliaSubmission 13