In Australia, online gambling is perfectly legal, for the most part. Some sites are locally licenced and regulated, some are not. While the government says the unregulated variety are acting unlawfully by accepting Aussies, there’s absolutely no penalty against the players who choose to play there. How they deposit funds to do so, however – locally or otherwise – may soon change.
The nation’s big four banks have come under fire recently for allowing credit cards to be used for online gambling. That issue has been raised as a matter of social responsibility, with some arguing that the use of a credit card for gambling online is unethical, and a breeding ground for the proliferation of problem gambling.
Australia’s online gambling market has seen exponential growth in recent years, especially in the sports betting sector. The nation’s regulated operators have an estimated 800,000 account holders – a number that continues to grow in rapid succession.
Two major investment groups – the Responsible Investment Association Australia (RIAA) and AMP Capital – have each opened communications with the big four banks, expressing their concerns over the issue. And apparently, it’s starting to sink in.
Big Spenders & Big Lenders
The RIAA carries a great deal of influence in the pecuniary field, with its members controlling $1 trillion in managed assets. The group recently submitted letters to the chairs of big four banks, outlining their apprehensions over the inherent risks of addiction, and the roles banks could be playing in perpetuating that risk by processing credit card deposits for Australia online gambling sites.
According to Simon O’Connor, chief executive for RIAA, the response from the big four has been a positive one. He said they’re currently in communication to “work through what a solution may look like.”
AMP Capital, which controls $160 billion in managed investments, confirmed that it has initiated similar dialogue with the banks, albeit entirely separate from the RIAA’s efforts.
UCA Funds Management, a firm with $1 billion in assets under their wing, is working with Bank Australia to come up with a solution to the problem. The firm has requested a review of the bank’s current policies regarding credit card deposits to Australia online gambling sites, suggesting that such transactions be restricted to a debit-only system.
“Providing people with credit to gamble does not fit within a responsible lending ethos,” wrote Michael Walsh, chief executive of UCA, in a letter to the chairman of Bank Australia. “We are concerned that this will cause financial risk and reputational damage to the bank as more case studies emerge of banks facilitating problem gamblers getting more deeply into financial difficulty.”
Australia Financial Review (AFR) reported that some banks have already ceased the facilitation of credit card payments for online gambling. These include American Express, Bank of Queensland, Citibank and Suncorp.
The big concern, especially for investment groups, is that credit card deposits for online gambling could present a significant risk to banks. Punters often hold multiple lines of credit, and if they find themselves tumbling into debt over a gambling problem, that financial crisis would fall back on the banks.
To make matters worse, doing so raises grave concerns over a direct conflict with the financial industry’s responsible lending obligations.