The whole gambling thing never made sense. A lottery ticket here and there seems harmless, and once Mega-millions hits the $600 million level, I am in for 5 dollars, but when it comes to big-time sports betting, I don’t get it.
The driver is that I am a sore loser. But when you get credit cards involved in the topic of gambling, my credit manager training makes me start to twitch. It doesn’t take a sophisticated FICO score to tell you that someone who finances gambling with a credit card is a poor credit risk.
We covered one side of the gambling issue last year when the WSJ ran an editorial on the gambling/credit card issue, suggesting that the topic is not about gambling and credit cards, but rather about liberty. In this matter, in the case of Murphy v. NCAA, the Constitution prevents Congress from giving orders to state legislatures had more to do with states rights than it did with the ethics of gambling.
Ok, I get that. Legal gambling becomes an unintended consequence, but it is not for me, nor it is in my household budget to drop $100 on the result of who will win the next sporting event. I’d rather go out to dinner with the money.
Here is a turnaround on the topic. Casino News, a trade magazine reports that a major Australian Bank has gone a 180 degrees on payment acceptance for gambling.
- Australian bank Macquarie has announced plans to ban gambling- and lottery-related transactions on its credit cards, the Australian Financial Review
- The changes are set to take effect on July 1. Under those, any transactions that are classified as gambling under the merchant codes will be blocked when a card holder tries to conduct them.
No one is here to sell a platform on ethics, but there are some common sense issues. You don’t drink and drive. You say thank you. Also, you don’t finance gambling, particularly on a payment card that charges 25% interest.
This is about Credit Management 101.
- Macquarie’s moves comes amid growing regulatory pressure within Australia’s gambling space and as stats show that Australians are among the world’s biggest gamblers. In addition, concerns have been raised that the portion of the nation’s population that its struggling with gambling-related problems has easy access to credit.
- According to the 2017 edition of the Household, Income and Labour Dynamics in Australia (Hilda) survey, nearly 200,000 people in the nation struggled with problem gambling. And according to gambling analyst H2 Gambling Capital’s 2017 rankings, Australia had the greatest gambling loss per head in the world, with a 24.7% gap between the country and second-placed Hong Kong.
Several takeaways. Payment systems are not designed to be personal rights or ethics watchdogs. They function to enable payments. But, credit systems need to operate to manage risk, and placing bets on open credit lines is not prudent. Despite the trend to broaden acceptance on cards, it is good to see a bank take a more conservative approach.
And, that, you can bet on, no credit card required.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
