Senate committee says choice is why using credit cards for online gambling should remain

It said the onus for protecting people from online gambling should lie with the banks.

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An Australian Senate committee tasked with reviewing a Bill that sought to ban the use of credit cards for online gambling has recommended for it to be scrapped.

Introduced into Parliament by Senator Stirling Griff last year, the Bill sought to make it a criminal offence for an organisation to accept credit card payments for interactive gambling services, which covers all gambling that takes place online.

Currently in Australia, online gambling activities are not regulated in the same way physical as gambling spots such as licensed venues, casinos, and TAB outlets, as credit card use is permitted when gambling online.

The Senate committee decided to not recommend the Bill as it found it could result in unintended consequences that impact the broader gambling community and lotteries.

In the committee's report [PDF] assessing the Bill, it said these impacts included consumers potentially seeking out other payment mechanisms, some consumers placing more focus onto unregulated offshore wagering, and increased use of third-party payment mechanisms for gambling.

It added that there was already an existing framework for preventing harmful use of credit cards as individuals applying for credit cards are subject to consumer credit and background checks to assess their suitability for particular products. In this regard, the committee said the onus for credit card regulation, when it comes to online gambling, should be on financial institutions.

"In this context, the committee recognises the central role of financial institutions to issue and operate credit cards in accordance with relevant legislation," the committee wrote in its report assessing the Bill.

The recommendation comes despite the Parliamentary Joint Committee on Corporations and Financial Services not yet finalising a related inquiry into the regulation of the use of financial services, such as credit cards and digital wallets, for online gambling in Australia.  

The joint committee has already received consultation for the inquiry in June and is currently preparing its findings.

Among the submissions received by the joint committee were ones from Tabcorp, Mastercard, and Visa.

Gaming giant Tabcorp in its submission said it supported the call for banning credit card use by Australians on online gaming platforms, such as betting apps. The company came to a similar conclusion as the Senate committee, however, saying that such a mandate should be the responsibility of banks.

"If we got more information from the banks that a card was suspect, we could shut it down. If the banks notified us that this was a problem, we would be able to stop dealing with that problem, but this flow of information doesn't happen," Tabcorp CEO David Attenborough told the joint committee last month.

Attenborough added that banks are "best placed to do so, and many have already proceeded with restricting gambling transactions, even without legislation. Banks are also best placed to determine a customer's credit worthiness".

Both Visa and Mastercard shared a similar sentiment to Tabcorp when it was their turn to appear before the joint committee.

Mastercard said it does not see all card transactions that carries its brand -- only the banks do, and therefore it recommended for any mandated form of payment blocking to be the responsibility of banks.

"A typical transaction on the Mastercard network involves four participants in addition to us: The cardholder, merchant (a business who accepts payment for goods or services provided), issuer (the cardholder's financial institution) and acquirer (the merchant's financial institution) … in most cases, cardholder relationships belong to, and are managed by, our bank or financial institution customers," it said.

Visa, meanwhile, believes banks can use their existing real-time monitoring capabilities to apply blocks based on merchant category, as they do in the face-to-face environment.

"Visa's licensing and transaction processing processes do not distinguish between acceptance of credit, debit, or prepaid transactions. The Visa rules prohibit acquirers from submitting illegal transactions into the Visa payment system. To comply with this requirement, acquirers must ensure that their merchant's transaction activity is legal in both the buyer's and seller's jurisdiction," Visa said.

Disagreeing with the Senate committee's recommendation for the Bill to be scrapped, Griff said the pandemic has only increased the need for regulation as credit card usage for online gambling rose during that period.

"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 vulnerable to gambling harm -- whilst online betting companies operating in Australia have been making huge profits," Griff wrote in the report.

"It is disappointing that the committee, despite the clear evidence before it from a number of submitters, has decided to oppose the bill and kick the issue down the road."

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