Key points

• The Interactive Gambling Amendment (Credit and Other Measures) Bill 2023 seeks to prohibit interactive gambling service providers from accepting payments by credit card, credit related products and digital currency.
• This would bring online gambling in line with other forms of gambling—such as gambling in licensed gaming venues or casinos—for which credit cards cannot be used.
• Online gambling is the fastest growing gambling segment in Australia and the estimated prevalence of problem gambling is higher among interactive gamblers than non-interactive gamblers.
• Relatively little is known about the extent to which online gamblers use credit for online gambling.
• There is broad support for a ban on the use of credit for interactive gambling in Australia, including from the industry peak body for online gambling, Responsible Wagering Australia.
• Arguably the main issues associated with the Bill relate to possible unintended consequences. These include the potential for online gamblers to shift to alternative sources of funding such as payday lenders and pawnbrokers and/or to unregulated offshore gambling sites.

Introductory Info

Date introduced: 13 September 2023
House: House of Representatives
Portfolio: Infrastructure, Transport, Regional Development, Communications and the Arts
Commencement: Sections 1-4 on Royal Assent; Schedule 1, Part 2 on the day after Royal Assent; Schedule 1, Part 1, 6 months after Royal Assent

Purpose of the Bill

The purpose of the Interactive Gambling Amendment (Credit and Other Measures) Bill 2023 (the Bill) is to amend the Interactive Gambling Act 2001 (IG Act) to prohibit the use of credit cards, payments from credit card linked accounts, services or facilities, and digital currency, for interactive gambling.

Background

On 28 April 2023 the Government announced its intention to ban the use of credit cards for online wagering,[1] bringing ‘online wagering into line with land-based gambling where credit cards cannot be used’.

The measures contained in the Bill would effectively implement 2 of the 3 recommendations from the report of the Parliamentary Joint Committee on Corporations and Financial Services Inquiry into Regulation of the Use of Financial Services Such as Credit Cards and Digital Wallets for Online Gambling in Australia, which was published in November 2021.

Recommendation 2 of the report was that the Government should:

… develop and implement legislation to ban online gambling service providers of wagering, gaming and other gambling services (but not lotteries) from accepting payment by credit cards, including via digital wallets.

And further, in relation to Recommendation 2, that the Government should:

… ensure that, in designing and implementing [the above ban], these measures have no adverse consequences for lotteries, including the activities of not-for-profits, charities and newsagents.

An exception is made for lotteries on the basis that this is a form of gambling that presents a low risk of gambling harm.[2]

A Private Member’s Bill that was introduced to the House of Representatives on 27 March 2023 by Rebekha Sharkie MP also seeks to ban the use of credit cards (but not payments from digital wallets or using digital currency) for online gambling, as did a Private Senator’s Bill introduced into the Senate by former Senator Stirling Griff in 2020.

The latter Bill was the subject of an inquiry conducted by the Senate Environment and Communications Legislation Committee that reported in October 2021. The Committee majority report recommended that the Senate not pass the Bill.

It did so based on 2 main arguments; firstly, that it supported ‘the principles of choice and autonomy for individuals, including through the responsible use of credit cards for online gambling’,[3] and secondly, that it felt sufficient efforts were being made by online gambling operators in cooperation with banks and payment processing providers to prohibit online credit card wagering.[4]

In his dissenting report Senator Griff took issue with the majority report position, insisting that ‘the overwhelming majority of submitters to the inquiry supported the premise of this Bill: to prevent people from gambling with money they do not have—thereby protecting those at risk of experiencing gambling harm’.[5]

While they did not explicitly support the measures that the Bill would have enabled in their dissenting report, the Australian Greens indicated that they supported ‘greater regulation of the gambling industry to minimise harms of problem and predatory gambling’.[6]

Ultimately the Bill lapsed at the end of the 46th Parliament.

The measures contained in the current Bill are in line with a series of other recently introduced reforms that aim to respond to issues posed by online gambling. Many of these reforms fall under the National Consumer Protection Framework for Online Wagering which was implemented in response to a recommendation of the 2015 Review of Illegal Offshore Wagering.[7]

Extent of online gambling in Australia

In 2021, Gambling Research Australia published the findings of the Second National Study of Interactive Gambling in Australia (2019-20). The study, which draws largely on data from a survey of more than 15,000 Australians conducted in 2019, is described by its authors as ‘the most comprehensive recent examination of interactive gambling in Australia’ (p. 8).

Based on their findings, Nerilee Hing et al determined that, while overall gambling participation (in‑person and online combined) declined between 2010/11 and 2019, the estimated prevalence of online gambling had doubled from 8.1% to 17.5% (p. 10). Nearly one-in-three gamblers (30.7%) were estimated to have gambled online in 2019 compared to one-in-eight gamblers (12.6%) in 2010/11 (p. 10).

These findings are perhaps unsurprising given Australians’ high rate of internet and smartphone usage, intensive advertising and promotion by sports betting companies, and an increase in online gambling products.

Sports betting, along with race betting, lotteries, novelty betting, esports betting, fantasy sports betting and skin gambling,[8] were found to be the forms of gambling on which interactive gamblers place most of their bets online. Only a minority of interactive gamblers reported participating in poker, keno, bingo, instant scratch tickets, poker machines and casino games online (p. 11).

Gambling behaviours uniquely predicting interactive gambling were ‘higher problem gambling severity and betting on a greater number of gambling forms; specifically, lotteries, sport, races, novelty events, esports, fantasy sports and skin gambling; as well as purchasing loot boxes (p. 11).[9]

Compared to non-interactive gamblers, online gamblers reported higher frequency and expenditure on most gambling forms, with much of their spending online (66.1%), followed by in venues (31.1%) and on the telephone (2.7%) (p. 11).

Findings from the most recent Australian Communications and Media Authority (ACMA) annual consumer survey indicate that the prevalence of online gambling increased significantly in 2021. According to ACMA, ‘more than one in 10 Australian adults (11%) reported that they had gambled online in the 6 months to June 2021, up from 8% in 2020’ (p. 3). ACMA attributes the increase largely to the resurgence of sports betting following the 2020 COVID-19-related lockdowns (p. 6).

Extent of problem gambling among interactive gamblers

According to Hing et al, there was a statistically significant increase in problem gambling in Australia between 2010/11 and 2019, with the estimated prevalence of problem gambling in the adult population doubling from 0.6% to 1.23% (p. 13).

As suggested above, the estimated prevalence of problem gambling was significantly higher among interactive gamblers, with interactive gamblers in 2019 being nearly three times more likely than non-interactive gamblers to be problem gamblers and around twice as likely to be at‑risk gamblers. Hing et al found that:

In 2019, an estimated 3.9 per cent of interactive gamblers met the criteria for problem gambling, 9.4 per cent were moderate risk gamblers, and 16.8 per cent were low risk gamblers. That is, about one in three interactive gamblers reported some symptoms of a gambling problem. Further, problem gambling prevalence among interactive gamblers was estimated to increase by nearly 50 per cent from 2.7 per cent in 2010/11 to 3.9 per cent in 2019 (p. 13).

It should be noted that Hing et al qualify the above findings. Firstly, they observe that it is not possible to determine whether the increase in interactive problem gamblers is due to the increased migration of problem gamblers to interactive gambling or whether interactive gambling is causing more problems than previously. Secondly, they point out that almost half (47.3%) of at‑risk/problem interactive gamblers reported that they had most problems with land-based gambling (pp. 13–14).

In line with their higher estimated prevalence of at-risk and problem gambling, interactive gamblers were found to be significantly more likely to report experiencing at least one harm (34.0%) compared to non-interactive gamblers (15.6%) (p. 14).[10] Interactive gamblers were also significantly more likely to report experiencing severe harms such as increased credit card debt, selling personal items, and domestic and other violence.

The finding that people who gamble online are more likely to experience higher rates of gambling‑related harm is borne out by the results of the 2019 National Consumer Protection Framework for Online Wagering : Baseline Study survey.

Use of credit for online gambling

There are no regularly collected statistics on the use of credit cards for online gambling.[11] In recognition of this gap, the other recommendation of the abovementioned Parliamentary Joint Committee on Corporations and Financial Services inquiry was that the Australian Government should:

… prioritise the collection of data on online gambling in Australia, including the size and growth of the online gambling market, online gambling with credit, and the extent and nature of the associated harms (p. ix).

While data on the use of credit cards for online gambling are limited, based on 2019 National Online Survey data—which are not representative of the population as a whole and include higher proportions of low risk, moderate risk, and problem gamblers—the most common payment methods for participants were a debit card (45.2%), followed by credit card (40.1%) and PayPal (25.4%) (p. 171). Few of the interactive gamblers in this sample (6.1%) reported having had their bank block or limit their gambling transactions (p. 319).

Over 7% of participants (393 of 5,076 participants) in the National Consumer Protection Framework for Online Wagering baseline study survey, the final report of which was published in 2019, indicated that they had experienced increased credit card debt as a result of betting online in the previous 12 months (p. 68).

In their submission to the Parliamentary Joint Committee on Corporations and Financial Services inquiry into regulation of the use of financial services such as credit cards and digital wallets for online gambling in Australia, Sally Gainsbury and Thomas Swanton of the University of Sydney’s Gambling Treatment and Research Clinic report on the findings of an investigation into consumer credit use and the experience of debt problems among Australian adults who participate regularly in gambling. Gainsbury and Swanton found that of the 68 respondents reporting gambling-related credit card use:

• 54.4% met criteria for problem gambling with a further 19.1% meeting criteria for moderate risk gambling
• 26.5% reported seeking formal help for either gambling or debt problems from a support service within the past 12 months
• 13.2% reported having entered into a formal financial hardship agreement with a bank, credit provider, or Centrelink within the past 12 months and
• 5.9% reported that they had ‘experienced financial hardship causing them to be either formally declared bankrupt or to enter into a formal debt or personal insolvency agreement’ (p. 3).

Committee consideration

Senate Environment and Communications Legislation Committee

The Bill has been referred to the Senate Environment and Communications Legislation Committee for inquiry and report by 12 October 2023. Details of the inquiry are on the homepage Interactive Gambling Amendment (Credit and Other Measures) Bill 2023 [Provisions].

Senate Standing Committee for the Scrutiny of Bills

At the time of writing, the Senate Standing Committee for the Scrutiny of Bills had not considered the Bill.

Policy position of non-government parties/independents

As noted above, the Environment and Communications Legislation Committee, which was chaired by Liberal Party Senator Andrew Bragg, did not support the passage of the Interactive Gambling Amendment (Prohibition on Credit Card Use) Bill 2020, which would have prohibited the use of credit cards for online gambling.

In his dissenting comments on the Parliamentary Joint Committee on Corporations and Financial Services report on regulation of the use of financial services such as credit cards and digital wallets for online gambling in Australia Senator Bragg reiterated his earlier position. He argued that the imposition of a ban on credit for online gambling was unnecessary, based on insufficient evidence, and has the potential for negative unintended consequences.[12]

In a media release of 13 September 2023, Independent MP Andrew Wilkie welcomed the Bill, stating: ‘I have long campaigned for gambling harm minimisation measures to be introduced and this piece of legislation to ban the use of credit cards for online gambling is a wonderful step forward’.

As noted above, Rebekha Sharkie MP and the Australian Greens are likely to support the Bill.

Position of major interest groups

Based on submissions and witness testimony to the inquiry into regulation of the use of financial services such as credit cards and digital wallets for online gambling in Australia, the Parliamentary Joint Committee on Corporations and Financial Services concluded that there was ‘broad support… for banning credit for online wagering in Australia’ (p. 33).

The support came from a range of sources, including public health, research, community financial counselling and consumer financial rights organisations, and the industry peak body for online wagering, Responsible Wagering Australia.

Research conducted by the Australian Banking Association and reported on in the inquiry report suggests that most Australians (81%) support restrictions on the use of credit cards for gambling while over half (54%) believe that the use of credit cards should be banned altogether (p. 33, footnote 51).

Financial implications

According to the Explanatory Memorandum, the Bill is ‘not expected to have any financial impact on Commonwealth expenditure and revenue’ (p. 3).

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[13]

Key issues and provisions

The Bill has 2 Parts, the first of which contains amendments to the IG Act so that the use of credit for interactive gambling is prohibited. The amendments in the second Part contain contingent amendments relating to enforcement of the ban.

Part 1 of the Bill creates a new criminal offence and a new civil penalty provision in relation to the ban.

Criminal offence

The IG Act currently creates a criminal offence where a person provides a regulated interactive gambling service[14] that is a wagering service and the person either:

• provides, or offers to provide credit in connection with the service to a customer, or a prospective customer, of the service who is physically present in Australia: subparagraph15C(1)(b)(i) or
• facilitates the provision of gambling credit to a customer, or prospective customer, in Australia ‘other than by way of an independently-issued credit card’ [that is, a card not issued by the provider of the gambling service]: subparagraph 15C(1)(b)(ii).

Items 8 and 12 remove the words ‘other than by way of an independently-issued credit card’ from subparagraph 15C(1)(b)(ii) and paragraph 15C(3)(b). The effect of this is to no longer allow providers to enable or encourage the use of credit cards by customers or prospective customers. In short, the amendment does away with the existing carve-out for independently-issued credit cards.

Item 9 inserts proposed subsection 15C(1A) which makes it a criminal offence for an interactive gambling service to accept or offer to accept payment from a customer or prospective customer who is physically present in Australia, for a wagering service (this does not include lotteries) using a payment method that is specified under proposed subsection 15C(4A), inserted by item 15. The maximum penalty for the criminal offence is 500 penalty units. As the current value of a penalty unit is $313, this equates to a maximum penalty of $156,500.

Item 10 inserts a reference to proposed subsection 15C(1A) into existing subsection 15C(2) so that a person commits the new criminal offence on each separate day that the contravention continues.

The payment methods specified in proposed subsection 15C(4A) are a credit card, an account, service or facility in which payment is made from a linked credit card (primarily digital wallets), digital currency (or cryptocurrency), or a method determined by the Minister by disallowable legislative instrument. The allowance for Ministerial discretion is to account for any possible new forms of credit developed to circumvent the new restrictions.[15]

Civil penalty

Item 13 inserts proposed subsection 15C(3A) into the IG Act to create a new civil penalty provision where a person provides a regulated interactive gambling service that is a wagering service; and the person accepts, or offers to accept, payment in connection with the service using a payment method set out in proposed subsection 15C(4A) from a customer, or prospective customer, who is physically present in Australia. The maximum penalty is 750 penalty units which equates to $234,750. Item 14 inserts a reference to proposed subsection 15C(3A) into existing subsection 15C(4) so that a person contravenes the new civil penalty provision on each separate day that the contravention continues.

Item 17 makes a consequential amendment to subsection 15C(5) to ensure that the existing due diligence defence provision applies to the new criminal offence and civil penalty provision should providers inadvertently furnish services to people who are physically present in Australia.

Item 18 inserts proposed subsection 15C(5A) into the IG Act which creates a new due diligence defence provision that provides that the new criminal offence and civil penalty provision do not apply if the interactive gambling service provider did not know and could not, with reasonable diligence have ascertained, that they were accepting, or offering to accept a prohibited form of payment. As with the current due diligence defence provision at subsection 15C(5), the note to proposed subsection 15C(5A) clarifies that providers who seek to use the due diligence defence bear the evidential burden—that is, they are required to demonstrate the reasonable diligence steps undertaken to ensure that customers are not paying using credit.

Enforcement

Part 2 of the Bill deals with enforcement. Item 36 inserts proposed sections 64E, 64F and 64G into Part 8 of the IG Act. These changes will:

• provide that each civil penalty provision of the IG Act is enforceable under Part 6 of the Regulatory Powers (Standard Provisions) Act 2014 (Regulatory Powers Act), which creates a framework for accepting and enforcing undertakings: proposed subsection 64E(1)
• ensure that the Australian Communications and Media Authority (ACMA) is an authorised person in relation to the civil penalty provisions of the IG Act, for the purposes of Part 6 of the Regulatory Powers Act. This means that the ACMA is able to accept enforceable undertakings: proposed subsection 64E(2)
• allow the ACMA to provide specific written directions (called remedial directions) to a person to ensure that a wagering provider does not contravene a civil penalty provision, or is unlikely to contravene the provision, in the future: proposed subsection 64F(2)
• create a new criminal offence and new civil penalty provision in respect of a person who is subject to a remedial direction but contravenes that direction: proposed subsections 64F(3) and (4)
• ensures that contraventions of the criminal offence and civil penalty provision created by proposed section 64F are continuing contraventions: proposed section 64G.

Possible unintended consequences

Arguably, the key issue associated with the introduction of a ban on the use of credit for interactive gambling is the potential for unintended consequences, including increased harms to some vulnerable customers.

Several submissions to both the Environment and Communications Legislation Committee Inquiry into the Interactive Gambling Amendment (Prohibition on Credit Card Use) Bill 2020 and the Parliamentary Joint Committee on Corporations and Financial Services Regulation Inquiry into the Regulation of the Use of Financial Services Such as Credit Cards and Digital Wallets for Online Gambling in Australia expressed the concern that prohibiting credit card payments for interactive gambling could result in some customers resorting to alternative sources of credit to fund their gambling.

Sally Gainsbury and Thomas Swanton from the Gambling Treatment and Research Clinic note that some of these non-bank lenders, such as payday lenders and pawnbrokers:

… may have inadequate consumer protection safeguards in place, such as comprehensive credit history checks and risk assessments that consider potential gambling problems. Given the fees and interest rates charged by such lenders are typically very high, it is plausible that increased borrowing from these sources may exacerbate financial problems (p. 5).

Moreover, based on their own preliminary research findings, Gainsbury and Swanton observe that it is individuals who are experiencing severe gambling problems that may be most at risk due to their higher rates of borrowing from payday lenders and pawnbrokers.

Relatedly, Gainsbury and Swanton note a shift to alternative lending sources could result in reduced gambler exposure to harm minimisation interventions implemented by some financial institutions. These interventions include things like blocks on credit cards for gambling purposes, limits to the extent of gambling on credit, and ‘notifying customers of the costs associated with gambling on credit cards’ (p. 5).

A ban on the use of credit for online gambling could also result in the increased use of illegal offshore wagering websites which accept credit-based payments. In its submission to the Senate Environment and Communications Legislation Committee inquiry, ACMA notes that:

… illegal offshore gambling services often allow consumers to use Australian credit cards to deposit money into their accounts. The providers of these illegal offshore services are typically located in jurisdictions with limited regulatory oversight and minimal or no consumer protections. Complaints received and investigations undertaken by the ACMA to date, indicate that consumers face heightened risks due to offshore activity because of regulation and oversight. These risks include:

• unauthorised use of credit cards
• refusal to pay all or part of winnings
• lack of responses to customer enquiries.

Accordingly, we note that the potential benefits of banning the use of credit cards for online gambling domestically need to be balanced against the risk of consumers moving their gambling activities to offshore providers that pose significant additional risks to the consumers (p. 3).

Since 2019 ACMA has been using its powers under the IG Act to work with internet service providers (ISPs) to block illegal offshore gambling websites. However, gambling researcher Charles Livingstone has, along with others, questioned the extent to which it is possible to regulate access to offshore gambling sites.

Livingstone points out that blocking access requires cooperation with (or coercion of) internet service providers (ISPs) as well as the identification of sites to be blocked and the provision of specific technical information to ISPs to facilitate the block. While this is taking place, people running the site may change its name or move domains and resume their operations. Livingstone has described the process as being akin to the game of ‘whack a mole’.

According to ACMA data, relatively few Australians use offshore interactive gambling services. In 2021 one in 20 adults who had participated in online gambling (5%) reported having used an offshore betting site or app in the 6 months to June 2021 (p. 9). A further 6% were not sure where the service they had used was based.

Having acknowledged the potential for unintended consequences for some gamblers associated with a ban on credit for interactive gambling, Gainsbury and Swanton nevertheless support such a ban. They do so on the grounds that:

The use of credit cards for gambling constitutes a major risk factor for experiencing gambling-related harm. Therefore, removal of this risk factor by means of prohibition is likely to be successful in achieving the intended outcome of gambling harm minimisation (p. 5).

Gainsbury and Swanton do, however, recommend that ‘further research be undertaken to understand how consumers are using different payment methods for online gambling sites and to evaluate the impact of any ban, particularly with the aim of detecting unintended negative consequences and driving further efforts to reduce gambling harms’ (p. 6).

As noted above, the Bill provides that a review of the ban it would enable would need to be conducted within 2 years of the Bill’s enactment.