Introduction
The overwhelming majority of submitters to the inquiry supported the premise of this bill: to prevent people gambling with money they do not have—thereby protecting those at risk of experiencing gambling harm.
Dr Mark Zirnsak, deputy chair of the Alliance for Gambling Reform told the committee:
We are supportive of this bill. It would be a significant step forward in addressing, as outlined in our submission, the harm that credit gambling does cause. Disproportionately, credit betting is used by people who are being harmed by gambling, and it is one of the most costly forms of finance to engage in gambling. The research is overwhelming about the harm.
The current situation in Australia is that credit cards are prohibited for offline or land-based gambling. However, credit cards can still be used for online gambling. Given the meteoric rise of online gambling in recent years and corresponding rise in gambling harms, it is only logical and reasonable to extend the offline prohibition on credit cards to online gambling platforms.
The urgent case for change
There is no reason to continue the anomaly that allows the continued use of credit card betting online. It is out of step with other jurisdictions and out of step with community standards.
The Australian Banking Association (ABA) undertook a consultation to seek community views about the use of credit for online gambling. The overwhelming majority supported further restrictions on the use of credit for online gambling.
In its submission the ABA stated:
…the use of credit cards for gambling on poker machines in licenced venues, TAB outlets and at racing tracks were banned by state and territory governments in the early 2000s…However, these bans did not extend to online gambling as it wasn’t widely available at the time. Two decades on, online gambling now accounts for 55% of all gambling, 25% of Australian adults have gambled online in the past 12 months.
Other jurisdictions such as the UK have already enacted a ban on betting with credit cards. The UK's came into effect on 14 April of 2020, and was implemented after the UK Gambling Commission formed the view that gambling with credit created harm and needed greater regulation. The UK also instituted other measures to reduce gambling harm, including a moratorium on gambling ads during the pandemic.
The Federal Government has failed to follow the UK or other similar jurisdictions such as Sweden. Indeed, it has not implemented any measures that limit the risk of harm associated with gambling, with even the National Exclusion Register promised two years ago beset by delays.
By the Department of Social Services' own admission, it has only been monitoring the situation and the debate, with no action recommended, and there is "no specific change in government position or policy" on the issue.
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.
Ms Lauren Levin, Director of Policy and Campaigns at Financial Counselling Australia, told the committee:
Flutter Entertainment for Sportsbet announced that Sportsbet's operating profit was up 108 per cent for the six months to 30 June last year compared to the year before. Entain, which is Ladbrokes, reported strong Australian online revenue growth of 55 per cent in 2020 compared to only three per cent in Germany and 27 per cent in the UK. The banks are also reporting the same thing. The credit bureau Ilion joined together with Alpha Beta and they reported a 67 per cent rise in online gambling during the first week of April last year. A few weeks later, NAB showed in their transactional data that gambling spend was up 62 per cent from the same four-week period the previous year.
These figures are astounding, but the examples provided by Ms Levin of such large increases in profits for online gambling operators reflect the huge losses for gamblers—which are compounded by steep credit card interest rates—with gut wrenching impacts including the collapse of businesses, jobs, family breakdown and loss of life.
Last year the Australian Gambling Research Centre (AGRC) conducted research on gambling habits during the pandemic in its Gambling in Australia during Covid-19 survey.
Dr Rebecca Jenkinson, Senior Research Fellow at the Australian Institute of Family Studies, told the committee that:
Our key finding was that we did see large increases among these participants, who were already gambling prior to COVID, in online gambling, so increases in frequency of gambling. We saw that one in three participants signed up for new online wagering accounts. A larger proportion of their gambling time was spent online, and we saw that around one in 20 started gambling online for the first time. So these are really important results. A lot of that was driven, in this sample, among young men. It was really young men aged 18 to 35 where we saw large increases in frequency of betting. They were much more likely to sign up for new account during COVID and much more likely to be classified at risk of harm.
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.
Harms associated with credit card betting
The significant harms associated with credit card betting are well known.
During the hearing they were illustrated by Dr Charles Livingstone, Associate Professor, School of Public Health and Preventative Medicine at Monash University.
Dr Livingstone told the committee:
Many people use credit cards to load up their gambling account because it's convenient to do so and the companies quite happily accept credit cards. It's not an uncommon practice. The problem is when credit cards get maxed out and start being used, as Dr Jenkinson said, to chase losses. Chasing losses is a real [mark] of people who are starting to descend into a spiral of gambling harm. If you lose money that you have and then chase it with money you don't have, which is what you're doing with credit card betting, then the harms and the difficulties accelerate rapidly. Someone who's using credit cards to gamble is already experiencing harm, because they're going to be paying more interest rates and so on than they would. They're almost certainly likely to lose… And, once they've started using credit cards, it's very easy to continue to do so. That, coupled with the relative ease with which credit cards can be obtained and other forms of credit can be obtained, means that people end up in very serious trouble very quickly, and the cycle of chasing losses and so on is fuelled, I think, by the credit card availability and its utilisation when it is available. Remember, we’re talking about interest rates here in the range of 18 per cent, which is not insignificant, and it rapidly escalates the indebtedness that people experience. So…once you start using money you don’t have the spiral accelerates rapidly.
The faulty argument for self-regulation
Responsible Wagering Australia's (RWA) announced on 13 August 2021 that its members had agreed to develop a technical solution to prohibit credit card betting.
Whilst the announcement—made the day it gave evidence to the Parliamentary Joint Committee on Corporations and Financial Services—finally recognises the harm caused by gambling with credit cards and associated products, it is at odds from RWA's original submission to this inquiry which was scathing of the need to place a ban on credit cards use for online gambling.
The turnaround, whilst welcome, has been prompted by sustained scrutiny from stakeholders, the media, and two parliamentary inquiries, including this inquiry into the bill. Unfortunately, the proposal by RWA is akin to having the fox guarding the hen house. It is unworkable and does not resolve the issue because RWA only represents a handful of online betting companies and has no authority over non-members. Further, no timeline has been proffered by RWA and there has only been an agreement to meet with the ABA which also does not cover all financial institutions.
Several witnesses to the inquiry rejected RWA's proposed self-regulation model in lieu of legislation to deal with preventing credit cards from being used for online gambling.
Ms Levin told the committee:
I think [the decision by RWA] is a great recognition of the harm. But it’s not quite enough, because, while Responsible Wagering covers some of the major operators, it doesn't cover them all. There are a bunch in New South Wales who are not their members. There are a whole lot of people and organisations who are not their members. It's the same with the banks. The banks don't represent the fintechs. Although it's a really significant step, and I applaud them for that, we need legislation.
Dr Livingstone told the committee:
If nothing else, the recent fracas with Crown demonstrates that, left to themselves, gambling organisations will push the law to the limit and perhaps beyond it. Whilst I'm not suggesting that Responsible Wagering Australia is likely to condone unlawful behaviour or perhaps predatory behaviour - perhaps some of its non-members might - the reality is that they are in business to make money, and I think it's important to give them a clear boundary as to where they should be constrained…I think the reality is that, unless they have a clear boundary, the edges are going to be very blurred. I’m strongly supportive of legislation in gambling regulation.
These sentiments were echoed by the ABA which stated in its submission:
The ABA encourages the Committee to consider further amending the Interactive Gambling Act to establish a consistent policy approach to the use of credit cards for gambling across all gambling services in venues and online for the benefit of customers.
Dr Zirnask told the committee:
Responsible Wagering Australia now say they support banning credit betting, although they don't want legislation to do it. We think legislation is absolutely necessary because, firstly, a voluntary agreement by them could be wound back at any time. Plus, they don't cover all [online] wagering providers either. Plus, there can be new entrants into the market that they don't cover. So you could quickly have it eroded by those who stay outside of that particular agreement.
Conclusion
It is disingenuous for the committee to say that it "supports the principles of choice and autonomy for individuals, including through the responsible use of credit cards for online gambling" when faced with the overwhelming evidence from submitters and witnesses who work at the coal face to support people who have lost huge sums of money in only a few gambling transactions online using money they do not have.
The committee has provided no justification why the use of credit cards for online betting should be allowed to continue when a credit card ban has been in place for land-based gambling in pubs, clubs and casinos for almost two decades. The committee's position is neither logical nor reasonable given the weight of the evidence presented to this inquiry.
The committee has ignored the warnings of the experts, financial counsellors and advocates who gave example after example of how damaging the use of credit for gambling is.
It is galling for the committee's main report to rehash elements of RWA's original submission (which stridently opposed the bill) in its attempt to justify is opposition to the bill. Whilst banks and financial institutions do conduct credit checks on their clients, credit cards are easy to obtain and, after obtaining a credit card, getting a limit increase is also relatively easy. Online gambling operators do not conduct any risk assessment on their clients.
Credit card debt is costly and takes a long time to repay. Minimum monthly payments on credit cards can mean that debt takes years, and even decades, to repay, resulting in sustained financial hardship for not only the gambler but their family too. For example, spending (losing) $10 000 in a single bout of online gambling could take 43 years and 11 months to repay and cost $36 332 if making the minimum monthly repayments.
It is also disappointing that the committee has sought to point to the Australian Communications and Media Authority's (ACMA) statutory review into the credit betting provisions in the Interactive Gambling Act 2001 as that review, which is due to be tabled in parliament shortly, only deals with the credit betting provisions in the legislation as it stands. The scope of the review "is focused on the operations of the current legislation - it does not address the use of independent credit cards".
I am confident that should the bill pass there would be no competitive advantage to illegal offshore online gambling operators – particularly given the evidence provided by Ms Rochelle Zurnamer, Executive Manager of Content Safeguards at the ACMA about the effectiveness of its access disruption rules in relation to those illegal gambling providers.
Ms Zurnamer told the committee:
…combating illegal offshore online wagering operators is a key responsibility and focus for our activities here. In November 2019 we started requesting that internet service providers block websites found to be in contravention. We've found that to be a very effective tool in disrupting access to illegal online overseas gambling sites. To that end, between November 2019 and 7 September this year, we had requested that ISPs block a total of 295 websites …we have found it to be a very effective disruption technique for these services.
The bill is not a silver bullet because problem gambling is a wider societal issue in Australia. However, it does seek to address the anomaly between the use of credit cards for in- person gambling, which is prohibited, and for online, which is permitted, and this will have a significant benefit for many people being harmed, or at risk of gambling harm, who currently bet with their credit cards.
It places the onus on online gambling providers to implement a ban of credit card use (and e-wallets) to prevent them being used for online gambling.
Research shows that people who experience severe gambling harm are far more likely to gamble more money than they can afford, use credit cards to do so and access credit card funds early. The effect is to accelerate the speed and extent to which they gamble beyond their means.
There is evidence that debt compounds harms created by gambling—it often serves as a driver for people to chase their losses and gamble more, which leads to a vicious cycle of more debt and more harm.
The harms associated with gambling are well known—they can have an impact on social relationships, family relationships, work performance and physical and mental health, in addition to financial stress, loss of creditworthiness, chronic high interest debt, homelessness, crime and suicide.
Removing credit cards from an environment of constant incentives to bet will make a positive contribution to reduce gambling harm in Australia.
Recommendation
That the bill be passed as a matter of urgency.
Senator Stirling Griff
Senator for South Australia