The role of financial institutions in gambling

Abstract

Financial institutions have an obligation to uphold rigorous corporate governance and risk management practices. However, they also have corporate social responsibility for assisting customers in enhancing and maintaining a state of financial wellbeing. Financial institutions play a role in facilitating gambling transactions in many instances, including potentially providing credit to customers experiencing gambling-related harms. Consequentially, this paper reviewed the role of financial institutions in gambling and considered various ways in which policies and practices could be enacted to enhance customer wellbeing. The review, which focused largely on Australia, found limited evidence of any bank policies specifically regarding gambling, despite a potential minor increase in awareness of the importance of such policies. Behavioural economics and psychological approaches may be promising frameworks to guide the development of policies to assist customers in limiting their gambling to affordable levels. Financial institutions may consider implementing products and resources for customers seeking assistance in managing their gambling expenditure, as well as appropriate processes for the disclosure of gambling problems and strategies to detect potentially risky transactions. It is likely that there will be increased government and community scrutiny over the role of financial institutions in gambling. A proactive effort to enhance customer wellbeing could have broad positive outcomes.

Use of Consumer Protection Tools on Internet Gambling Sites: Customer Perceptions, Motivators, and Barriers to Use

“…Policies and practices that assist gamblers to monitor and limit their gambling expenditure across sites are necessary. Recent involvement of financial institutions in this area through enabling customers to block gambling from their accounts may be one strategy (Swanton, Gainsbury, & Blaszczynski, 2019). This is consistent with strategies already reported by participants who check bank statements as an adherence strategy.…”

Digital Gambling Payment Methods: Harm Minimization Policy Considerations

“…Financial institutions are in an ideal position to identify individuals on welfare or whose patterns of gambling expenditure cause and/or contribute to financial difficulties and should be involved in conversations on how to implement digital payment systems with consumer protection features. 28 The gambling industry should implement software to monitor and detect indicators of excessive gambling and proactive interventions to manage customers identified as being at risk of experiencing gambling harms, which is an important part of a sustainable business model as well as corporate social responsibility.…”

The role of credit cards in gambling

“…[44][45][46] Credit cards may charge higher interest rates for online gambling deposits, treating them as cash advances, which the gambler may not realize. 8,18 Those with problem gambling are also more likely to use credit cards to access cash advances 47 , and borrow money, or gamble with money, that had been originally allocated towards debt repayment. 48 › Although only a minority of gamblers use credit cards to gamble in land-based venues, problem gamblers may be more likely to use their credit card more than once per session.…”

“…77 Specifically, problem gamblers are more likely to report personal loans, credit card debts, and loans from friends and family to fund their gambling. 47,77 In fact, frequent payment method changes might indicate gambling problems, as it suggests poor planning or shortage of funds, which could imply chasing behaviour. 78,79 GREO Unsecured/Payday loans Problem gamblers are more likely than non-problem gamblers to use payday loans to gamble.…”

“…48,99 The four major banks in Australia permit gambling transactions on credit cards for most forms of gambling, with the exception of gambling machines, while multiple other financial institutions do not. 47…”