Gambling credit card ban: will it help gamblers and hit bookies?
A ban on gambling firms from accepting credit cards is designed to reduce harm to consumers, but how much effect will it have still remains a question for debate.
The UK Gambling Commission confirmed the crack down on Tuesday, affecting “all forms of land-based and online gambling” from 14 April, including high street and racecourse bookmakers and digital gaming operators.
The ban includes payments from e-wallets such as PayPal, which are funded by credit cards, with the e-wallet industry having “indicated that solutions to support a ban are generally available to their members”.
Firstly, there were questions about whether it will actually help people who have a gambling problem.
“Credit card gambling can lead to significant financial harm. The ban that we have announced today should minimise the risks of harm to consumers from gambling with money they do not have,” said Neil McArthur, chief executive of the Commission.
He pointed to examples where some gamblers have accumulated tens of thousands of pounds of debt through gambling funded by credit cards.
According to the Commission, around 800,000 people use credit cards to gamble and 22% of them are problem gamblers, nearly three times higher than the rate among online betting customers.
During the consultation before the decision, the Commission was told by some respondents who did not support this ban that problem gamblers could take out payday loans or extract cash from ATMs with their credit cards.
The watchdog imposed the ban anyway, as it said it would “reduce the risks of harm to many consumers” and “add levels of friction to the process of gambling”.
The house always wins?
Gaming operators have generally said that they expect only a marginal impact from the change, analyst Ivor Jones at Peel Hunt noted.
“Still, saying anything else would imply knowledge of players spending borrowed money that they cannot afford, which isnt supposed to be happening anyway,” he acknowledged, adding that the impact for the companies will not be known until the second half of 2020.
But analysts at Barclays have already forecast a “3%/4%” earnings per share downside in 2021 for Ladbrokes owner GVC Holdings PLC (LON:GVC) and William Hill PLC (LON:WMH), though that is “without assuming a switch to debit card deposits”.
There was a muted reaction from the likes of GVC and Betfair and Paddy Power owner Flutter Entertainment PLC (LON:FLTR) on Tuesday, which Richard Hunter, head of markets at Interactive Investor, suggested was “telling”.
The potential for real growth for the likes of Flutter and GVC, which also owns major online brands Sportingbet and Party Poker, is not necessarily on UK shores, Hunter says.
“For example, there have been a couple of developments which have driven online gaming, and sports betting in particular, to new levels.”
Increased mobile penetration has been a major factor, he explains, pointing to research from H2 Gambling Capital that estimates mobile usage for online gaming will rise from 41% in 2018 to over 50% in 2022.
Elsewhere, the relaxation of regulations banning sports betting has opened another door, the US being a key example.
While the UK gambling companies all had at least a small presence in the States and were quick to team up with US partners as GVC did with MGM Resorts, or acquire local brands as Flutter did with FanDuel, in order to capitalise.
With 19 states so far opening up the betting market, including the likes of New Jersey, Nevada, West Virginia and New MexicoRead More – Source