Many countries have already banned the use of credit cards for gambling purposes. As a form of borrowed credit, should the US adopt a blanket ban on credit cards, or should it remain a state-level decision?
In the United Kingdom, the use of credit cards to fund gambling accounts ceased in April 2020. The ban now also includes money from any e-wallets that have been funded by a credit card. The rationale is simple: Using borrowed credit to gamble can lead to serious problems. But does this prevent harmful gambling, and should the US follow suit?
Credit Card Gambling in the US
The revenue for online gambling across the US is more than $24.98 billion per year. Sports betting alone will reach $14.30 billion in revenue by the end of 2025. Part of this growth has been down to the flexibility offered by online casinos. Along with the convenience of playing from a mobile device, they also have different payment methods. Combined with attractive offers like free spins no deposit offers on slots, and matched bonuses, they have grown the sector hugely, both in the US and further afield. This is true of European countries such as Italy, where operators like Coolzino Casino work.
However, there has been evidence to suggest that in the UK, a ban did not work. A 100-page study suggested that in a 12-month period, many people who had struggled with problem gambling used a credit card to do so. This either suggests a lack of enforcement or that many people are going offshore to gamble.
The State of US Credit Card Usage for Gambling
Around 19% of Americans have bet on sports in some way. Credit cards are the most popular form of payment for online goods or services in the United States. These tend to stick to the big three of Visa, Mastercard, and American Express.
However, its use for gambling varies on a state-by-state basis. For sports betting overall, only four states accept credit cards: Indiana, Nevada, New Jersey, and Pennsylvania. Last year, there were also three states that banned credit card use for sports betting: New York, Delaware, and Connecticut. When it comes to online gambling in general, only five hold an outright credit card ban. These are Tennessee, Iowa, Massachusetts, New Hampshire, and Rhode Island. There are 23 states that allow consumers to buy lottery tickets with a card. However, this is also restricted to online methods. It is often perfectly acceptable for a consumer to buy tickets over the counter, perhaps at the grocery store.
Many credit card companies have already begun the process of banning gambling payments without the oversight of state laws and regulations. Much of this has been in place for some time, starting as far back as the millennium. Names to do so included Citibank, Bank of America, and Chase Manhattan Bank.
Why the US Must Consider a Total Ban
A total ban is hard to enact in the US. This is because laws on gambling are dictated at a state level. This can make enforcement on any issue extremely hard. People may be banned from gambling in one state, only to go over state lines to be able to gamble in another.
The Gambling Commission Chief Executive in the United Kingdom, Neil McArthur, believes that “Research shows that 22% of online gamblers using credit cards are problem gamblers, with even more suffering some form of gambling harm.” The reasoning behind this is that money gambled using credit cards is not the person's own funds. This is money on loan to them from a bank or financial institution.
This makes budgeting extremely hard to do. It can result in spiralling debt, which, when combined with problem gambling, can be devastating.
There is also a worry that it can heighten cognitive dissonance. Essentially, people don't realise how much money they have gambled, as credit card debt holds an invisible allure. A debit card differs in a this will come from funds in a person's account that they already have. This can place them more in control of their spending.
Added to this is the fact that it is possible to take out multiple credit cards. This is very easy to do in a world obsessed with credit. This could seriously exacerbate any problem gamblers' issues.
All of these issues have been highlighted by the National Council of Legislators from Gaming States. In December last year, they noted it as one measure states should adopt to promote safer gambling measures. They also said a tax rate of 15-25% should be added to state gambling licenses and criticized some of the language used in promotions, such as “risk-free”.
Of course, much of this centres around changes at a federal level. Until this changes, a blanket ban is unlikely to happen. For now, the US will have to continue to place its faith in its states for responsible gambling initiatives.
