Quite A Gamble: Banks, Credit Unions Keeping Eye On Customers’ Online Gaming

Online casino gaming and sports betting have exploded in Michigan, leading to fears by banks and credit unions that problem gambling could ruin customers’ financial lives and affect their own bottom lines. One Michigan credit union has gone so far as to prohibit its members from using their credit union-issued bank and debit cards at all online gambling sites.

An April survey by the Michigan Credit Union League found that Wyandotte-based Michigan Legacy Credit Union in Flint was the only credit union in the state reporting such drastic action.

Comerica Bank notified its customers in February that it would not allow them to use their debit cards or web and mobile banking services for online gambling. Doing so could result in debit cards and online banking services being temporarily disabled, the bank said.

It doesn’t appear any banks and credit unions in the Traverse City area are taking similar steps. But some say they’re worried about the prospect that problem gambling that could drain customer and member accounts, and are monitoring accounts for signs of trouble.

Browne

“Of course, there are concerns of it growing because it’s so heavily advertised,” said Karen Browne, president and chief executive of TBA Credit Union. “We do our best to keep our members informed and aware of the risks.”

Browne said only about 30 of its 18,000 customers are using TBA credit or debit cards on gaming sites. “It’s something we are monitoring,” she said.

The Michigan Problem Gambling Helpline received 568 calls in February, more than five times the number of calls it received in the same month a year ago. Some attribute the jump to online gambling.

Internet casino gambling and sports betting launched in January, 13 months after Gov. Gretchen Whitmer signed into law legislation legalizing such activity.

Michigan gamblers wagered $143 million in the first month of online casino gambling and sports betting, “the most successful online gambling launch” of the 16 states that allow internet gambling, according to industry tracker Michigan Sharp. Betting in the first three months of the year has approached a staggering $1 billion, according to the Michigan Gaming Control Board.

That’s provided a handsome payout to state government, which has so far collected more than $36 million in taxes and payments from commercial and tribal online gambling operations.

The state’s 13 online casinos and sportsbooks generated nearly $195 million in net revenues after winners’ payouts in the first quarter of this year. That’s almost two-thirds of the $300 million in revenue that the state House Fiscal Agency last year estimated online gaming could produce in its first year.

Ten tribal casinos and Detroit’s three commercial casinos offering online gambling, which is open only to people playing in Michigan. The Grand Traverse Band of Ottawa and Chippewa Indians runs an internet casino and sportsbook through internet gaming provider William Hill. The tribe took in $1.26 million in net revenue through March in online gambling.

Online gambling platforms, including William Hill, DraftKings and FanDuel, seemingly advertise nonstop on television and radio, and many of platforms allow gamblers to exceed credit limits on credit cards and run negative balances on debit cards.

That’s what prompted Michigan Legacy Credit Union to prohibit members from using their cards to gamble online.

“We are already seeing our members racking up debts through these online betting platforms that they can’t afford to pay back,” credit union CEO Carma Peters told Credit Union Times. “We are not making a judgment on gambling or online betting; as a member-owned credit union, we simply can’t afford the write-offs from our institution’s credit and debit cards.”

ELGA Credit Union in Burton, near Flint, saw members wager $1.1 million from their credit union accounts in the first two months of legalized online gambling. That gave pause to credit union CEO Karen Church.

“The transactions are taking some members deep into the negative,” Church said. “I am very concerned, as this easy gambling can be destructive for people with addictive behaviors.”

Michigan State University Federal Credit Union, with offices in Traverse City, is taking an approach that is aware but not restrictive. The credit union allows customers to use their credit and debit cards for online gambling, but is keeping an eye on such activity, said Deidre Davis, MSUFCU’s chief marketing officer.

“If a member’s account is mismanaged due to any potential number of reasons, we will take appropriate steps to assist our members,” she said, adding the credit union monitors member accounts “for negative balances and abusive behaviors.”

Davis said MSUFCU believes the best approach to addressing potential problems with online gambling is to provide free education to “help members be successful.”

That’s also an important business strategy as banks and credit unions grapple with the mushrooming popularity of a new form of entertainment that can quickly part participants from their money.

Kempf

Local credit union leaders and bankers who responded to inquiries for this story say they are reluctant to prohibit customers from using their cards to engage in a legal activity, unless problem gambling becomes widespread and forces them to write off negative account balances that customers can’t pay.

“Our stance is you manage your money your way,” said Andy Kempf, CEO of 4Front Credit Union. “People with a proclivity toward gambling will find avenues to do it, anyway. As long as it is a licensed activity by a government entity, it should be allowed.”

Kempf said a recent two-week snapshot of transactions by his credit union’s 90,000 members found about 300 online gambling transactions a day using 4Front credit and debit cards.

“It’s a concern of ours that we would watch,” he said. “If we have to take action down the road, we will.”

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