Regulate gambling industry credit, say financial counsellors

Financial Counselling Australia has called for an extension of consumer credit law to cover the activities of gambling companies.

FCA has issued a report on the sports betting industry, outlining the extent of credit activities in the industry and the aggressive use of debt collection services.

The report, Duds, Mugs and the A-List, said financial counsellors were assisting an increasing number of clients who have experienced "staggering" sports betting losses.

So-called A-list customers are offered credit of up to A$500,000. Even customers disparagingly referred to in the industry as "duds" or "mugs" are offered between $200 and $500 in unsolicited credit.

Betting companies actively encourage their customers to use credit, according to the report based on discussions with gambling financial counsellors, former gambling industry employees and government staff involved in gambling regulation.

Gambling companies are not covered by the National Consumer Credit Protection Act because they do not charge a fee or interest rate for credit and the credit can only be used for gambling purposes.

According to the report, gambling companies' credit assessments are based on whether the company will recover its money, rather than whether the customer would experience undue hardship in making repayments.

There is no consideration of the customer's circumstances, their capacity to repay or their wellbeing.

The FCA's preferred option is to prohibit the provision of credit for gambling purposes.

In the absence of this change, the next best option would be to extend the scope of consumer credit law to gambling companies and require them to meet responsible lending obligations.