January 14, 2020

The decision of the Gambling Commission to ban its licensees from accepting payments from domestic players via credit cards comes as no surprise. Sections 24(10) and (11) of the 2005 Act require the Commission to ‘consult…persons who…carry on gambling businesses and are likely to be affected’ by any changes to the LCCP but the end-result in this case was never in doubt. Implementation is April 14^th.

The proposed term is as follows:

Addition of new licence condition 6.1.2 – use of credit cards     

 All non-remote general betting, pool betting and betting intermediary licences, and all remote licences (including ancillary remote betting and ancillary remote lottery licences) except gaming machine technical, gambling software and host licences.

   1. Licensees must not accept payment for gambling by credit card. This includes payments to the licensee made by credit card through a money service business.

The proposed amendment to the LCCP includes a reference to credit card payments made via a ‘money service business’. The Commission, in its previous communications on the matter, was clearly contemplating prohibiting the use of credit cards by domestic players whether directly or indirectly to make their deposits with British licensees. The Commission is of the view that the relevant financial businesses are in a position technologically to implement this prohibition and it seems clear that the concept of ‘money service business’ is intended to follow the FCA definition which covers ‘carrying on by way of business the activity of: (i) operating a bureau de change; or (ii) transmitting money, or any representation of monetary value, by any means; or (iii) cashing cheques which are made payable to customers’. Given the express regulatory intention, the assumption must be that this is designed to cover any form or ewallet/APM through which payment is made via credit card.

Where an APM is used a situation can be envisaged where operators may be reliant on their payment service providers.  For example, an operator will have a contract with a PSP which is offering straightforward card-acquiring services (direct credit card payments via the card scheme) as well as separate APMs (via its own agreements with the APM providers). Alternatively the operator may have an agreement with a specific APM provider. In either case an operator may not have visibility as to how a pre-paid card/ewallet (and so on) is loaded and so will need to ensure that its PSPs are both aware of the prohibition and able to distinguish between and segregate funds loaded by way of credit card and via other means (e.g. debit card or direct bank transfer). Where a payment solution is the so-called ‘open loop’ (i.e. could be used for any purposes and will not inevitably result in the funds loaded ending up with the operator) as opposed to ‘closed loop’ then this will clearly be more difficult.