From 1 July, Australia’s Macquarie Bank became the first major Australian bank to ban the use of its credit cards for gambling.
Under the changes, any transactions that are classified as gambling under the merchant codes will be blocked to credit card holders. The banking group will also cap cash advance balances at $1000 from the end of August.
Macquarie publically announced that the changes are to support the financial wellbeing of their customers, by helping them manage their finances effectively and avoid problematic credit card debt.
Australians are the world’s biggest gamblers in per capita terms, with a net amount of AUD$24 billion (USD$17 billion) spent by punters in 2016–17 according to Australian Gambling Statistics. Bets on electronic gaming machines (pokies) make up half of this figure.
Overall, the regulatory environment in Australia has a strong focus on reducing gambling harm, with state and territory governments funding prevention activities and support services for their citizens.
While the move by Macquarie is a first for a large Australian bank, other financial institutions (e.g. American Express, Bank of Queensland, Citibank, Suncorp Bank, Virgin Money and Bendigo Bank) already prohibit the use of credit cards for gambling.
Tom Swanton, Research Assistant at The University of Sydney’s Gambling Treatment & Research Clinic has been researching how the role financial institutions play in promoting responsible gambling.
Tom said that while some of the larger banks currently allow credit card-based payments for gambling, they are also taking other steps to minimise gambling harm.
‘CommBank and Westpac have introduced an option that allows customers to block authorisation of gambling transactions on their credit card, as well as cash advances from ATMs,’ says Tom.
‘The mechanism operates by blocking transactions with gambling operators registered under the “betting/casino gambling” merchant category code.’
Tom adds, ‘CommBank has also set up a Gambling Support Service with specially-trained customer service representatives to assist customers having trouble controlling their gambling expenditure, for example, by activating the gambling block or providing financial hardship assistance.’
IAGR News spoke to Natalie Wright, Director of Office of Responsible Gambling NSW, about how effective these changes by Macquarie will in preventing problem gambling in NSW.
’Responsible gambling means only gambling with what you can afford to lose,’ explains Ms Wright.
’In our advice to the community we always advise against borrowing money to gamble, whether it’s through a credit card or loan, or by borrowing money from family or friends. Gambling with credit was an issue identified at the Royal commission into misconduct in the banking, superannuation and financial services industry, and it is a problem for some people.’
Ms Wright believes that while Macquarie Bank’s changes may help some of their customers, it’s just one part of the solution.
’This will help to prevent people gambling with credit, but it’s important that there are a range of strategies that people can use suited to their individual circumstances.’
Other strategies to manage gambling include self-exclusion, and imposing transaction limits or cash-withdrawal limits on bank accounts.
A recent review of the role of Australian financial institutions in gambling and minimising gambling harm found limited evidence of gambling-specific bank policies.
‘There is potential for banks to do more in this space to complement the harm minimisation interventions of industry and of governments,’ says Ms Wright.
The Office of Responsible Gambling would like to see more banks taking advantage of the opportunities that exist within their operations to prevent and reduce gambling harm, and to offer assistance to those experiencing problems with gambling.
’This could be through transaction limits, gambling or cash transaction blocks, not allowing gambling transactions at all, or through the support and outreach that they provide to people experiencing financial hardship or requesting support in relation to gambling.’
The Office is planning to work closer with banks around this going forward.
’We think there is a lot of potential for us to work with banks on this issue. We will be reaching out to financial institutions in NSW to work with them to identify opportunities for them to support people affected by gambling, and to support prevention and early intervention through their existing systems and services.’
Meanwhile, the UK's Gambling Commission and New Zealand's Department of Internal Affairs are both reviewing the use of credit cards for online gambling in their respective countries. We'll keep a close eye on how this develops.