The Michigan Legacy Credit Union has blocked transactions to gambling websites, fearing that the availability of online gambling in the Great Lakes State would lead to a higher incidence of gambling harm.
Michigan’s Legacy Credit Union Suspends Gambling on Credit
Michigan Legacy Credit Union CEO Carma Peters has spearheaded a reform that is designed to protect its 20,000 members, many of whom are from low-income brackets, from the potentially pernicious effects of gambling on credit.
Following the legalization of online gambling in Michigan, the Michigan Legacy Credit Union quickly noticed that around 1,200 transactions amounting to $83,000 were carried out by just 1% of its members.
To help avert what Peters saw as a calamity in the making, the union decided to cut off transactions to online betting, targeting offshore and regulated websites in the state. Peters was adamant in her motivation to have done so, citing “a financial disaster” for members had the union not acted sooner.
Speaking to the Crain’s Detroit, Peters elaborated on the matter, cautioning about the potential risk of allowing people to gamble on credit:
“We just thought the potential risk was way too much, and it wasn’t worth it. How many people are going to want to pay on a gambling debt?”Michigan Legacy Credit Union CEO Carma Peters
Peters was backed by Patricia Herndon from the Michigan Bankers Association, who agreed that the practice of allowing players to gamble on credit was a pernicious one and had many pitfalls.
Gambling on Credit Isn’t Popular
Beyond the United States, credit card gambling has been largely suspended, and efforts to suspend it have been spearheaded by Australian banks. The UK Gambling Commission (UKGC) announced a credit card ban in January 2020, demonstrating the regulator’s commitment to customer safety.
Many other banks and credit unions in Michigan and the United States are also following suit and making sure to block any transactions directed to gambling websites, citing the implied financial risks. Others have pitched in and confirmed that gambling credit is suspended to moderate risk and protect consumers.
Established financial institutions such as Capital One, Huntington Bank, and JPMorgan Chase are some of the banks to also impose a credit card ban for the purposes of gambling. Peters said that the union might reverse its policy, but for the time being, she sees it as a necessary precaution.
Peters concluded that she was concerned about the way gambling companies targeted customers.