Whilst PayPal may be one of the most convenient casino depositing methods around, the e-wallet service has come under scrutiny this week after it has been revealed that they may be allowing problem gamblers to spend thousands of pounds per day.
PayPal works by being linked to a debit card or to a bank account. However, purchases made via PayPal won’t leave your bank account for 48 hours.
Problem gamblers have been able to exploit this delay, meaning they can spend far more than the depositing limits. Moreover, PayPal has no innate gambling limits, which means the service will not recognise potentially dangerous behaviour.
This new revelation comes just weeks after the UKGC announced they would be launching a review into credit card spending at online casinos.
It also comes after many of the UK’s biggest banks have committed to allowing customers to block payments with certain retailers, in an attempt to curb addictions. The onus is now on PayPal to introduce similar mechanisms and to help uphold responsible gaming policies.
The Problem with PayPal
In an article published by The Guardian last week, three specific recent cases were cited as reasons to be worried about the e-wallet service’s attitude towards gambling:
- A 20-year-old had been online gambling, but had reached the limit on his bank card. With PayPal, he was able to deposit £2,000 every few minutes and continued to lose £150,000 in a single evening.
- A compulsive gambler said that as PayPal has no limit in regards to gambling, it won’t recognise previous transactions until it’s too late. The man called it ‘a nightmare’.
- A research associate at King’s College London has heard multiple stories of students who are concealing their gambling habits by transferring their funds to PayPal beforehand.
All three of these cases highlight PayPal’s problem. If a person has a PayPal balance of zero or less than the amount they wish to transfer, the remained of the cost is taken from their bank account.
However, as the amount isn’t actually subtracted from their bank balance until 48 hours later, people can essentially spend money they don’t have.
Tighter Checks and Restrictions Needed
All of the stories above highlight one main issue: if PayPal is allowing online casinos to accept payments via the service, then they need to be more responsible.
Commenting on the issues, a spokesperson for PayPal told the Guardian that they are ‘extremely concerned‘ and that they are ‘urgently looking into these reports and take them very seriously‘.
They added that they have ‘already reviewed the controls [they] have in place to identify and block problem gambling, and changes have been made to tighten the rules that govern these payments‘.
What Else Needs to be Done?
Although PayPal has promised that they will improve their problem gambling policies, it seems there are other much bigger changes they could make here.
For starters, PayPal should have a self-exclusion mechanism in place. This would allow customers to block payments with certain sites (such as online casinos and sportsbooks). Many of the UK’s biggest banks have these types of tools in place and so, PayPal should follow suit if they value their customers’ safety.
Secondly, if PayPal is allowing customers to make payments with money they don’t have, they should have much lower daily maximum depositing limits.
Pay by phone methods, which do allow players to essentially borrow money until they pay their monthly phone bill, have a strict £30 per day limit to stop users from racking up debts. A solution could be for PayPal to have similar limits, or a stricter payment verification process.
PayPal to be Reviewed by UKGC
Since these issues have been raised, it looks likely that PayPal could come under review by the United Kingdom Gambling Commission.
The UKGC will soon be launching a review into gambling with credit cards, which could lead to regulatory action. The Commission is now considering broadening the review to include online payment providers.
A spokesperson for the Department of Digital, Culture, Media and Sports (DCMS) told The Guardian:
“The Gambling Commission’s forthcoming call for evidence on gambling using credit cards will welcome wide-ranging submissions, in order to develop a more comprehensive understanding of associated risks.”
Should PayPal be included in the review, we can expect changes to their depositing and gambling policies in the near future. As always, we’ll keep you informed, so watch this space.