John Lee, Senior Research Officer, Money and Mental Health
Gambling in the red: what can banks do to tackle harm from gambling in overdrafts
22 April 2026
- Today we publish Gambling in the red – our new paper on the harm associated with gambling in overdrafts.
- Gambling with credit cards, another form of borrowed funds, was banned by the Gambling Commission in 2020, but gambling with overdrafts remains an unaddressed source of harm.
- There is a range of ways in which banks can address some of the harm caused by overdrafts – and there is an appetite for change among people with lived experience of gambling harm.
Today, we’ve published our latest policy note, Gambling in the red, which explores the harms from gambling in overdrafts and how banks can introduce stronger safeguards to help protect customers.
The harms of gambling in overdrafts
Our Research Community shared their experiences of gambling in overdrafts, with many explaining that their mental health problems had led to them using their overdraft to gamble, as it seemed to offer an escape.
People instead found that gambling in their overdraft led to further financial difficulty, exacerbating their mental health problems. The resulting financial strain caused friction with partners and people spoke about withdrawing socially because they could not afford to go out.
The experience of some showed that relatively small amounts of money spent on gambling can spiral and cause harm.
“I’m not a massive gambler. I won’t go and spend like hundreds or thousands of pounds on football bets or horse races… To me, it’s more, I would put like £10, £15, £20 on the lottery… And it just kind of spiralled, so I was putting myself into further debt. I was thankfully, if thankfully is the right word, able to increase my overdraft, just to be able to afford your daily stuff like your bread, your milk and anything else for your groceries.” Expert by experience
Respondents talked about being constantly overdrawn and using their overdraft as an extension of their income, using it to pay for everything, including gambling, housing, food and bills. They spoke about being in a vicious cycle of using debt to gamble further in the hope of winning and paying off losses.
“I used my overdraft to gamble in the hope of being able to pay it off. In doing so, I am putting myself in even more debt and then that puts me in a bad place, hoping that gambling will help me pay off my overdraft with a win.” Expert by experience
The safeguards customers want to prevent harm caused by gambling in overdrafts
It was clear from our Research Community that there was a huge appetite from respondents for banks to improve support for people gambling in their overdrafts. When asked to rank actions that banks could take, fewer than one in eight respondents (13%) chose ‘none of these interventions – the bank should do nothing as it is not their business how a customer spends their overdraft’ as their first choice.
- Almost half (48%) said banks should send an alert about the value of payments going to gambling firms from a customer’s overdraft
- 45% said banks should limit the amount of money from a customer’s overdraft that can be used for gambling payments.
The regulatory framework already exists for banks to take action on gambling in overdrafts
Continuing to facilitate gambling in overdrafts does not tally with regulations and guidance published by the Financial Conduct Authority in recent years, including:
- the 2021 guidance on the fair treatment of vulnerable customers
- the Consumer Duty
- and the 2024 Consumer Credit Sourcebook (CONC) 5D Overdraft Repeat Use.
These regulations and guidance require firms to consider the impact of their product on vulnerable customers, avoid causing foreseeable harm, and take appropriate steps when a customer is repeatedly using their overdraft and is experiencing or at risk of financial difficulties.
What action should banks take on gambling in overdrafts?
We’re calling on banks to tackle harm from gambling in overdrafts by adopting, testing and learning from one or more of the following four recommendations:
1) Automatically block gambling payments in all overdrafts – Blocking gambling payments from customers’ accounts identified as coming from an authorised or unauthorised overdraft would enhance a bank’s ability to protect its customers from harm.
2) Automatically block gambling payments in unauthorised overdrafts only – Unauthorised overdrafts incur the highest charges for customers, putting them further in debt. An option for banks, therefore, could be to automatically block gambling payments in unauthorised overdrafts only.
3) Offer customers the option to block gambling in overdrafts – Allowing customers who feel that gambling in an overdraft facility is causing them harm to turn off the ability to do so, preventing them from accumulating debt from gambling.
And 4) Identify and proactively communicate with customers who are gambling within an overdraft – Messages could range from outlining the tools and support available from the bank and external organisations to notifying customers about the amount they have spent on gambling within their overdraft.
Banks have already taken positive steps to tackle gambling harms, such as preventing gambling with credit cards or introducing tools that allow customers to block payments to gambling operators. They are ideally placed to identify and address the harm caused by gambling in overdrafts. Positively, some banks are exploring introducing such safeguards. Their experience, and crucially the results they see, will be vital in encouraging other banks to intervene in the best interests of their customers.