Cash Advances and Lottery Tickets

in Credit Cards, Lottery Tickets

Today I learned an interesting paradox that arises when you buy lottery tickets with a credit card. Luckily, I was not the lottery ticket purchaser, I saw this on a local TV news program, where a gentleman was very upset to find out that this was actually the case (i.e. if you buy lottery tickets, or services from the OLG, the Credit Card company treats it as a cash advance).

I thought this was a great idea as a deterrent to buying lottery tickets (or using the new OLG Gambling on-line program), but the credit card companies logic is also very sound. Think of it, I buy lottery tickets with money that I borrowed, but will promise to pay it back? No, the Credit Card Company wants you to have the cash right away, and the only way to do that is via a cash advance.

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To quote the OLG web site directly:

It’s important to note that your credit card issuer may apply a cash advance fee when using credit cards on PlayOLG. To be sure, check with your credit card issuer. 

Please note:  Not all credit card institutions accept online gambling transactions.  If yours is rejected, please try a card issued by a major Canadian bank or INTERAC Online.

Evidently folks are not reading the suggestion to check with their Credit Card Companies as there are plenty of stories complaining about extra charges, and unnoticed cash advances.

Frankly, I am thinking good on the Credit Card Companies (for once), but that is very mean-spirited of me.

One more helpful thing from the OLG site on their “Where does all the money go” page:

2% of forecasted OLG slot revenue to problem gambling funding

Wow.

{ 13 comments }

  • canadianbudgetbinder April 10, 2015, 12:01 AM

    When we bought lottery tickets we always put them on our credit card and never got any type of ‘extra costs’ because we rolled it into the overall shopping. I did write something about this in 2013 where customers were being charged when they swiped to buy lottery tickets and like you I felt it was a money grab and then some. Even the retailers are being charged when the card is swiped. Not many people know. I think Ricardo did a nice job summing it all up in his comments.

    Reply
  • Robert M April 8, 2015, 9:50 PM

    Honestly, I am having a hard time following the logic of a cash advance for lottery tickets.

    When I use a credit card, I am buying a product or service from a third party with money loaned to me by the credit card company.

    In the case of a cash advance, I am taking money from the credit card company directly without any third party. In that case the card company treats it as a personal loan and can charge interest immediately.

    I just came back from a vacation where insurance, cruise tickets, air flights and hotel rooms were all purchased on credit card. Third parties were involved and everything was paid off before the bill was due. This was without cost even though the product was in the future or may not occur at all in the event of a travel emergency (hence the insurance).

    In the case of a lottery ticket, I am purchasing it from a third party so it is not a direct loan. The card company gets its fee from the third party and so should not charge me for the transaction.

    This is just a money grab on the unsuspecting. Another reason why credit card companies deserve their own circle in hell.

    rob…

    Reply
    • bigcajunman April 9, 2015, 6:53 AM

      I can see their reasoning on this one, but it could just as easily be a cash grab as well.

      Reply
      • RICARDO April 9, 2015, 9:47 AM

        @R M
        There are always people looking to “game” (excuse the pun) the system. As mentioned previously there were people going to the casino (OLG) in Vegas and purchasing chips with their VISA, say $5K. This was before the “cssh advance” regulations came in. Then they cashed in the left over chips, lets say $4995 and kept their loyalty points. That was one reason the C.C> companies put a stop to that and instituted the “cash advance” rules.
        If you are taking a loan for the cash then you will get a cash advance with the service/interest charges. If you forward purchase an item – TV, cruise, flights, even a room at the casino, then that is OK for credit. You can even pay for the room after you have utilized it but remember the commerce is paying the C.C. company as well.

        Basically if you go to a gaming house you need cash. Go to a grocery or pharmacy and buy a ticket along with your other items and it ia all OK.

        Besides they don’t want everyone buying tickets on credit and then declaring bankruptcy the month after when thay can not pay their C.C.

        Reply
        • bigcajunman April 9, 2015, 9:54 AM

          Touche!

        • robert M April 10, 2015, 12:29 AM

          I realize that I may be splitting hairs here, but this is about using credit to buy a product. If the credit card is charging the OLG their usual fee for buying a lottery ticket with credit, then the regular rules apply. If not, then it is a loan and the cash advance rules apply since the customer is making the credit card company to buy it on their behalf. The OLG is getting a free ride and avoiding the 2-3% credit surcharge.

          I don’t follow the bankruptcy argument because I could easily declare bankruptcy after buying a tv instead of a lottery ticket. The initiation of bankruptcy is independent of how I got there.

          I agree that there is an issue of optics, but does the card company really give a damn? Does the OLG really care? Both are selling products. Sometimes the products are used for good purposes, sometimes bad.

          This is not about going to a gaming house where I agree with all your points. It is about buying a product, either at a convenience store or over the internet. The gaming house analogy is a convenient ploy to get extra money out of the unsuspecting customer.

          The only analogy that makes sense here is if I use a credit card to withdraw cash from an ATM (which I accidentally did once) and then use the money to buy the ticket. Then that is clearly a loan.

          If I go to a casino to play the games and use a credit card to get cash, then I am using a loan to play the games. If I use a credit card in a video poker machine, then I am using cash to play.

          The only definition that could satisfy this issue is that the act of buying a lottery ticket is in fact engaging in a “game” and not purchasing a product. But then the convenience store analogy should also be considered a loan. It is not because it is simply too hard to track the activity.

          So the only way the customer wins is to buy the lottery ticket through a convenience store (3rd party) so that the transaction is essentially hidden. Otherwise you are just being scammed by the clever definition of either a game or gaming house.

          So the moral here is too always use a third party (other than the OLG) to buy your lottery tickets and to forgo the convenience of the OLG site.

          Just had a weird thought, (it is after midnight), what if the OLG accepted paypal and then paypal paid the debt with your credit card? Would it be considered a loan or a purchase?

          Anyway, as with most casinos, the game is rigged and it is buyer beware.

          cheers,

        • RICARDO April 10, 2015, 9:37 AM

          Ontario Lottery and Gaming Corporation (OLG)
          That pretty well says it all.
          If you purchase from them you are basically “in the game” so it is a cash advance.

          Quite correct Robert, it is all a question of hair splitting but that is the way it is. We can discuss it back and forth as to what is “right and just” (in out opinion) but I doubt that will change the rules. That is the way it is set up and has been for quite some time. If you got caught then you will more than most likely have to write it down as a lesson learned unless you want to hire a lawyer. Then you had better hope that lottery ticket pays big time.

          Just my opinion

  • RICARDO April 8, 2015, 11:54 AM

    Not to encourage gambling or lottery tickets (6/49, etc) but when you purchase your weekly ticket at a grocery store or pharmacy it just gets rolled in to the purchase. So no extra “cash advance”
    If you go and “gamble” at a casino or government official site then that would be different.
    “IN THE BEGINNING” (one of my famous quotes) of “points” credit cards quite a few people would use them at the casino(s) in Vegas just to get the points. They would “buy” chips and use a few and then several hours later, or however long, cash in the chips. They walked away with a lot of points on the credit card for very little expenditures. That was nipped in bud fairly fast once the C.C. companies saw a lot of money going to the casinos and the C.C. balance getting paid off every month. Obvioulsy the casinos lost out as well as they pay a commission on the transaction as well.

    Reply
  • Michael James April 8, 2015, 8:42 AM

    OLG spends 2% of revenue on problem gambling. Is that to stop it or promote it?

    Reply
    • bigcajunman April 8, 2015, 8:49 AM

      Wasn’t exactly clear on that one, wasn’t a “prevention” program, that is for sure. Which makes more sense?

      Reply
      • BetCrooks April 8, 2015, 11:33 AM

        I think it’s to pay for those moronic ads tagged ‘know your limit, play within it.’ That’s like telling an alcoholic it’s ok to only drink 10 shots a day since that’s within their limit….

        Reply

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