Why gambling addiction is suddenly a problem for banks

When Rob Minnick needed money to fuel his betting habit, he often found it where a lot of gamblers do. He got a cash advance on a credit card.

Minnick was 18 years old when he started betting, convinced that his extensive knowledge of sports would make him a winner. The New Jersey native moved from daily fantasy sports to traditional sports betting to casino games. Eventually, he’d find himself sitting at an Atlantic City poker table while simultaneously peeking at his cell phone, where an online slot machine was spinning.

In late 2022, Minnick was in recovery from his gambling addiction when he had a relapse, which was fed by cash advances. It started with a sports bet, which led to a visit to Parx Casino in Bensalem, Pennsylvania.

By the time the 12-hour binge ended, it was close to midnight. Minnick had created so much debt that he says he had to work a second job for more than five months — and put all of his earnings into repayment — to dig out of the hole.

“With the credit cards, you know that the cash advance fee is going to be huge,” Minnick said. “And you don’t care. Because you’re convinced that you’re going to win it back.”

Over the last six years, legal gambling has spread like a weed across the United States. In early 2018, before a pivotal U.S. Supreme Court decision, only Nevada allowed sports wagering. Now 37 states, plus the District of Columbia, do. State lawmakers have moved quickly amid fears that standing pat will result in a loss of tax revenue as their residents gamble in neighboring states.

Pro sports leagues — once hostile to gambling due to fears that the integrity of their games could be compromised — have embraced the financial opportunities that gambling offers. A year ago, the first-ever sportsbook inside an NFL stadium opened at FedEx Field in suburban Maryland. And fans watching on TV are now inundated with gambling ads.

The ease of access to legal gambling has also soared, as bettors increasingly place their wagers on mobile apps, which is feeding fears that a problem-gambling epidemic is building. In 28 states, gamblers can make sports wagers from their mobile phones, according to the American Gaming Association.

At least six more states currently allow online casino games. As online gambling’s legal status has changed, so has the stance taken by many U.S. banks. Just a few years ago, the mainstream financial industry wanted nothing to do with online wagering, which generally involved offshore operations of dubious legality.

Today, gambling is a growing source of revenue for banks.

“The opportunities for them are overshadowing the risks and dangers,” said Brianne Doura-Schawohl, a lobbyist who advocates for policy responses to problem gambling.

But judging by the experiences of the United Kingdom, which has a longer history of widespread legal gambling than the United States, banks here may eventually be dragged into the burgeoning debate over how to address problem gambling.

After all, banks provide credit to bettors who have already depleted their savings. Banks are also well positioned to offer ways to make it easier for problem gamblers to protect themselves from their own self-destructive impulses. And banks hold reams of transaction data that can indicate which customers have gambling problems.

Back when legal gambling in the U.S. was happening only in casinos, and bettors needed to use cash, banks had less information about who might have a gambling disorder. That’s changed in the era of online betting.

But what is the proper role for U.S. banks in addressing problem gambling? So far, there has been little public discussion of that question. And there are no easy answers, as Minnick’s experiences illustrate.

“There was always a way to spend more money than I had when I was gambling,” said Minnick, who has been in recovery since his November 2022 relapse. “And that was even without the use of credit cards.”

Of course, specific banks can decide to ban the use of plastic to fund their customers’ gambling accounts. But cash advances offer a simple way around such restrictions, since they don’t trigger a gambling-related merchant category code. Another workaround: using a credit card to purchase a gift card or e-wallet funds.

“I can broadly say that people who are addicted to gambling develop the ability very, very rapidly to get money that they don’t have when they need it,” Minnick said.

There is also the politically charged question of how to balance harm reduction with personal autonomy.

“There’s no clear-cut solution right now that everyone would be happy with,” Minnick said.

Minnick, who will turn 25 in February, now creates…