"Lotteries present a low risk to gambling harm."

By Kate Northrop

Australians may soon not have the ability to use credit cards for online betting, except for lottery purchases.

A new legislation is being proposed by the Australian federal government that would prevent gamblers from placing online bets using a credit card unless they are for the lottery.

The new law, expected to be introduced by the government within months, calls back to a parliamentary inquiry from 2021 that recommended the ban on the payment method for online gambling.

"People should not be betting with money they do not have," Minister for Communications Michelle Rowland said.

Rowland and Minister for Social Services Amanda Rishworth will make an announcement on Friday that is supposed to level the playing field between online gambling and "land-based gambling," which already imposes restrictions on the use of credit cards.

To prevent credit card numbers from being used to deposit funds into betting accounts, the government plans on using Bank Identification numbers (BINs) to identify credit card payments. Credit card purchases are estimated to make up 20% of deposits into wagering accounts.

"Blocking BINs has been successfully deployed by Australian casinos and poker machine venues to stop credit card withdrawals from ATMs and was used in the United Kingdom to implement its credit card ban for online gambling," Rowland and Rishworth explained.

The new legislation will come into effect later this year via amendments made to the Interactive Gambling Act of 2001.

"Minimizing this harm is not a set-and-forget exercise," Rishworth said. "Bringing online wagering into line with land‑based gambling, where credit cards cannot be used, is another positive step."

However, lotteries, including those run by charities, are an exception to the ban because "they present a low risk to gambling harm."

A sizeable amount of lobbying for the ban on credit card purchases for online gambling came from the banking sector, in which many banking institutions argued that there was not enough basic regulation in the multibillion-dollar industry to limit risk.

In the early 2000s, Australian states and territories did enact a ban on credit card purchases for in-person gambling, but since online gambling did not have a presence at the time, the legislation did not apply to the digital space. Now worth $50 billion a year, banks are pushing for a return to equilibrium.

"Why should it be possible to do something in the virtual world that is prohibited in the real world?" Australian Banking Association CEO Anna Bligh said. "Every pub with poker machines, every TAB and every trackside bookie already implemented this 23 years ago."

Banks are conscious of their responsibility as lenders and are wary about providing credit to customers who may be at risk of impulsive purchases.

"This is just a product that is not suitable for credit," Bligh continued. "You can accrue a very, very large amount of debt in an incredibly short period of time and have nothing to show for it."

Carol Bennett, the CEO of the Alliance for Gambling Reform, said that she and her group look forward to the change.

"This is a significant measure in reducing harm from online gambling," Bennett said. "We know many people experience high level of gambling harm and those people are far more likely to use credit cards to obtain cash advances. This is money people can scarcely afford to use."

Bennett said they are aware of possible "loopholes" some customers might exploit, such as using credit cards to obtain cash, but either way, this change would be an important step to bring online gambling in line with other forms of gambling.