Credit bet: Are you a gambler who wants to step up your game and know more about betting? Here is something that might just be of interest to you, it’s called ‘credit bet’. It is pertinent to say that betting is a rising trend in contemporary societies today remains a pivotal industry.
Some persons may not be willing to see it as such, however it is. It is a rising industry with a high level of patronage. Thus, even credit card companies are venturing into it. Hence we have what is called credit bet. To begin, it is pertinent we know what credit bet is all about.
What is Credit Bet?
Credit bet refers to when a customer is provided a line of credit, allowing the placement of bets without using deposited funds. This practice is sometimes referred to as ‘deferred settlement betting’ allowing settlement of an account after the bet is placed and within a period of time.
It is also defined as a contractual agreement between a lender (who happens to be the credit card issuer) and a borrower (who happens to be the user of the card) in which the borrower assumes something of value (in this case a credit to bet), and agrees to repay the lender on a future date.
Necessary Information on Differences in Credit Bet
However, credit bet sometimes does not involve the use of a credit card issued independently from the wagering service provider to fund the betting account (regardless of whether the credit card issuer treats the charge as a cash advance or not).
Though there are some arguments put against credit bet, credit card issuers are revolting against it since it promises to stand as a challenge to their business.
Before delving into these arguments that threaten to bring to bear the prohibition of credit bet and what gave rise to it, let’s look at the importance of credit bet to credit card issuers.
General Importance of Credit Bet
The following are some of the importance of credit bet:
- It allows the customer or be able to bet anytime even without having cash at hand. Thus, it is sure means of always having available funds to attempt making more money. Also, it provides the credit companies the privilege to increase and enlarge their customer base, thereby, creating a broad networking system.
- It makes betting easier and affordable as long as the customer can always pay back. Card issuers may take issue with extending lines of credit to consumers who are effectively putting that money up in the air for better or for worse. In other words, if a cardholder takes a bet on credit and loses, then he is on the hook for that debt plus interest after losing their money.
- Gambling proponents through credit betting also help push card issuers to make changes to credit betting. Payment networks such as MasterCard and Visa have already laid part of the groundwork to authorize card transactions for gambling. It enables the card issuer to fund and create a large customer base for himself; there by helping him to grow his business on a larger scale level.
Reasons for the Prohibition of Credit Bet
One of the reasons for the prohibition of the credit bet was the recommendations from the O’Farrell Review into the Impact of Illegal Offshore Wagering released on 28 April 2016. It held that online gambling operators should apply a wider range of consumer protection measures.
Furthermore, a greater level of customer due diligence was another measure. One of the concerns identified was that suppliers of these credit facilities were not complying with rules affecting other lenders in connection with the provision of credit because the credit offered does not accrue interest.
Consequences of breaching the Credit Bet Prohibition
The provisions of the Amendment Act outline expensive consequences if an online wagering operator is found to be in breach of the prohibitions. The following are some of the consequences for those who breach the credit bet’s prohibition act:
Those found guilty will face both criminal and civil penalties for a contravention of the ban on credit betting. A corporate online bookmaker could face a maximum civil penalty of $787,500 (based on current penalty rates), with a separate offence being committed in respect of each day during which the contravention occurs.
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Necessary Information on How to Regulate Credit Bet
However, despite the issues surrounding credit betting, it is believed that credit betting can be regulated. At this juncture, it is necessary to highlight how this is possible. Below are some of the ways to regulate credit bet:
Credit Bet Can Be Regulated Through Private Regulation of Credit Card Gambling
This would be made possible through changing merchant classification codes for gambling companies as seen in 2015 when MasterCard and Visa began changing their merchant classification codes for gambling companies such as;
government-owned lotteries, horse-racing venues, and licensed online casinos by giving them distinct codes. This could have established a precedent.
It is important to note that, theoretically, banks and card issuers could use these classification codes to regulate gambling activity. For example, a cardholder with a $15,000 credit card limit may be restricted to a $2,000 gambling limit by a bank or card issuer.
In any case, if issuers decide to allow the use of credit cards to place bets, cardholders should remember to exercise caution not to go into debt and be sure to pay off the amount in full.
It is hard enough paying off a credit card when it’s used for things like groceries and gas. Throwing gambling in the mix could be a life-changing problem for some unwary cardholders.
Credit Bet Can be Regulated Through Government Policies
Prohibition of credit betting arguably is not the best move to curb the crimes associated with it; however, instituting and enforcing positive policies through well-defined and ordered modality can go along a way to regulating it.
In a nutshell
Be that as it may, in a nutshell, it should be borne in mind that betting is one of the fast-growing industries there is in this contemporary world, and credit betting which is its affiliates; though possessed with some shortcomings, is also here to stay.