Online Gambling May Suffer From Credit Crunch

Published: Monday, July 27, 2009 Online-Casinos.com

Banks and credit card companies in Europe are steadying themselves for the big crunch that's looming as debtors default on their credit card balances. Recent reports from the International Monetary Fund have calculated the consumer debt in the USA is as high as $1,914bn USD. The estimated default percentage is a staggering 14% of that total. Europe will begin to feel the same sort of crisis as consumers in the E.U. fail to meet their obligations.

The International Monetary Fund also has calculated the estimated consumer debt in Europe to top $2,467bn USD and as much as 7% of that figure is expected to go to default. The United Kindom is the continents largest borrower on the books and much of the loss will be felt in that nation. This is not good news for those involved in online gambling operations as gambling debt on credit cards is a major portion of revenue for the companies. As borrowing becomes more risky to the credit card company's tighter controls will be put in place and the online gambling industry is bound to feel the pinch. The collapsing U.K. housing market and tighter restrictions on lending by banks has limited the indebted consumers ability to access home equity and pay down high interest credit card loans. Again as credit gets harder to acquire online gambling firms are sure to see a downturn in their revenues.

An analyst at Credit Suisse, Jonathan Pierce commented recently, that UK credit card securitisation had suffered "a very sharp rise in arrears to a level well beyond the previous peak seen in 2006". Lloyds Banking Group has a huge uninsured debt load that is in severe jeopardy if the current economic crisis continues.

Barclays,the UK's biggest credit card lender with 11.7m U.K. customers said it's default levels had risen sharply in the last year due to unemployment and rising costs. European economic trends trail behind the USA by approximately six months so analysts are watching the US money markets closely for more intensive default action. All in all everything in this world is a bit of a gamble, in this case the banks are definitely hedging their bets.