Online gaming firms have downplayed the potential effect of the banning of the use of credit cards for gambling payments. However, the regulations could still be significant and there could be more to come.
The UK Gambling Commission wants to tackle problem gamblers. Reducing the stakes for fixed-odds betting terminals was one part of this. The latest is the ban on using credit cards to make payments into gaming accounts. This will come into force on 14 April.
Some gamblers have built up huge amounts of debt on their credit cards through betting and gaming. The ban covers deposits for online gaming and payments in betting shops.
The ban includes e-wallets that obtain funds via credit card. Alternative methods of funding e-wallets can be used, though.
Most gambling is not funded by credit cards so there are plenty of alternatives. The new proposal will not stop problem gambling, but it should provide another hurdle for some.
Gaming firms will argue that they have ways of identifying problem gamblers, but these do not work all the time, if much at all.
Online gaming firm Gamesys (LON: GYS) has recently merged with Jackpotjoy and it is one of the companies that says that the change is likely to have a minor impact.
Around 5% of online deposits are via credit card and many of these are from people who use other payment methods. There are probably 2% of deposits from people that only use credit cards. This does not include funding of e-wallets, which account for 11% of gambling funds in total, so the percentage could be higher.
Then again, that is still a large number of people and is a big problem for the authorities.
There could be more regulation to come. There is talk of a maximum £2 online slot games stake. That would mean it would take more time for a problem gambler to use up their funds.
A review of gambling regulation is planned. This could lead to other changes. The responsibility for gambling may also be switched to the Department of Health.
This reflects a turnaround in policy on gambling in the past two decades. It is very different to the days when super casinos were heralded and betting shops became easier to open.
Peel Hunt believes that the effect of the credit card ban will not become clear until the second half of this year.
Many of the large gambling firms are international, such as GVC (LON: GVC) and William Hill (LON: WMH), so the UK is part of their overall market. Even so, it is still a significant profit generator, so at the very least profit growth will be held back and it may even be difficult to achieve any growth in the UK.