“Money won is twice as sweet as money earned,” said Fast Eddie Felson, the protagonist in Martin Scorcese’s The Color of Money. Eddie would not like the recent U.K. ruling about gambling and credit cards. With my credit manager hat on, I disagree with him.
No moral judgments, but betting with credit puts the household budget on a wrong course. The simplicity of lobbing down your plastic, without feeling the reality of cash, disrupts the existence of a potential loss.
BBC reports on a credit card ban on gambling, beginning April 14, 2020.
- The ban, which starts on 14 April, comes after reviews of the industry by the commission and the government.
- A total of 24 million adults in Britain gamble, with 10.5 million of those doing so online.
- Neil McArthur, Gambling Commission chief executive, said: “Credit card gambling can lead to significant financial harm. The ban that we have announced today should minimise the risks of harm to consumers from gambling with money they do not have.
Now, it is one thing to gamble the household cash budget at the track, but when you start getting into credit lines, there is undoubtedly an issue. Open credit lines often exceed disposable cash.
- “Research shows that 22% of online gamblers using credit cards are problem gamblers, with even more suffering some form of gambling harm,” he added.
- “We also know that there are examples of consumers who have accumulated tens of thousands of pounds of debt through gambling because of credit card availability.
- There is also evidence that the fees charged by credit cards can exacerbate the situation because the consumer can try to chase losses to a greater extent.”
Moral issues aside, gambling can disrupt everyday budgets.
- According to CNBC, Between 2018 and 2019, revenues in Britain’s gambling industry reached £14.4 billion ($18.7 billion), according to data from the Gambling Commission.
- The U.K.’s highest-paid CEO in 2019 was Denise Coates, chief executive and founder of online betting company Bet365, who took home a $422 million pay check.
Financial Times did not seem to mind the ban:
- “The evidence suggests that the risks to people depositing money using credit cards were significant both in terms of them gambling money that is not theirs to start with and the fact that online it was encouraging riskier behaviour by making players more likely to chase their losses,” said Neil McArthur, chief executive of the Gambling Commission.
Brits will have one last swing at American Super Bowl LIV (2/2/20), but after that, all credit card bets are off.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
