The UK Gambling Commission’s ban on the use of credit cards for all forms of remote gambling (i.e. betting, gaming and lotteries) and for non-remote betting came into force yesterday, 14 April 2020. This supplements pre-existing regulations preventing operators of non-remote casinos, bingo, adult gaming centres and family entertainment centres from accepting payments by credit card, meaning that only non-remote lottery remains outside the ban.
The ban comes into effect via the addition of a new licence condition in the Licence Conditions and Codes of Practice (LCCP) which applies to holders of the relevant operating licences. This is of course a significant change for stakeholders across the gambling industry, whether operators, payment providers or card schemes, but what effect does the ban have on the use of e-wallets in the sector? And to what extent are e-wallet providers ready for the new regulations?
New Gambling Commission regulations apply to e-wallets
The consultations leading up to the eventual change in regulations were initiated by advice from the Responsible Gambling Strategy Board (RGSB), which found that gambling with credit cards is a risk factor for harmful gambling, as the chance that the consumer will gamble with more money than they can afford is increased.
Acting upon this advice, the Gambling Commission engaged in a lengthy consultation process which involved many e-wallet providers. There were concerns that if the ban didn’t apply to e-wallets, the regulations could effectively be avoided by using credit card payments via e-wallets. As a result of these concerns, the Commission took the position that, in relation to e-wallet providers, the new conditions will impose a responsibility on operators to only accept payments via e-wallets in circumstances where the wallet provider can assure the operator that it can prevent credit card payments that would be used for gambling.
The Commission has specifically identified 2 ways in which e-wallet providers will be able to prevent credit card payments:
- E-wallet providers can identify credit cards by the card issuer Identification Number and therefore prevent payment being processed if that number is flagged in the system.
- Where the e-wallet provider allows money to be transferred from a card into a ‘pot’ held within the wallet, the provider would need to ensure that the money held within the pots were not derived from credit card funds and being used towards gambling activities.
Are e-wallet providers ready for these new regulations?
The Gambling Commission understood that the major e-wallet providers would be able to deliver solutions in a relatively short space of time, whereas smaller providers may need a lot longer to implement solutions to adapt to the new regulations.
Responses to the consultation from the Electronic Money Association (which responded on behalf of most e-wallet providers) indicated that its members generally have the solutions in place to support the ban. However, each member would need to assess whether it would need to develop a solution to prevent credit card payments for remote gambling, or instead withdraw from the gambling market. E-wallet providers considered that it may take approximately 9 to 18 months to implement the necessary solutions, depending on whether the responsibility of implementing a solution mostly fell with the e-wallet providers or the gambling operators. However, this timeframe didn’t land with the Commission. The Commission noted that some businesses only needed a matter of days to deactivate the acceptance of credit cards as a payment method and considered that a period of 3 months since announcing the results of the consultation in January 2020 should have been sufficient for businesses to deliver the technical and systemic changes to prevent gambling by credit card.
What does this mean for gambling operators?
The message to all British-licensed gambling operators is clear: make sure that you are satisfied that your third party e-wallet providers can prevent payments by credit card being used for your services, or risk being in breach of the new regulations. The Commission will not wait for your chosen e-wallet providers to make the necessary changes before determining a breach of the LCCP.