Affordability and the BGC

After various leaks, the contents of the final white paper will likely be no surprise and foremost will be what it says about affordability checks. From what we know, it is believed that a two-tier system of checks that operators will need to undertake is to be introduced.

The less intrusive tier would involve checks on secondary sources such as County Court judgements to ensure a player doesn’t have obvious black marks against their name. This tier would kick in at a level of £125 in a month or £500 over the course of a year.

The higher tier would involve, according to the document written about in the summer, “more detailed consideration of a customer’s financial position” using tools such as Open Banking. The triggers contained within this tier are more nuanced and, at least as stated in the leaked document, would involve checks on anyone who has £1,000 in 24 hours, or £2,000 in 90 days. 

New customers will also have to be reviewed if they spend £500 in 24 hours in the first month or £1,000 in their first 90 days. Under-25s will be subject to the new customer triggers regardless of how long they have been with an operator.

Unfortunately, that is about as much as we or indeed any consumers know about affordability checks. For further details, we will have to wait until at least January.

The game’s gone

That hasn’t stopped speculation about what such checks might have on the UK punter, though. 

According to a recent article in the Racing Post, there is a widespread scepticism among the betting public about what their reaction would be to the idea of affordability checks.

According to one punter, “the game is up for me now” should any type of check be introduced. Another said they felt it was “pointless” carrying on in the face of such unspecified intrusions.

Another response clearly took the libertarian tack. “It boils down to asking for proof of funds and mainly asking for bank statements which I will not give to anybody,” said the punter. “I wouldn’t give my brother my bank statements.”

Reactions such as these clearly have the sector rattled. Yet, as the articles from the Post make it clear, the disquiet about affordability checks is largely down to actions already being undertaken by the operators.

As various UK operators have mentioned in recent trading statements, they have seen collectively their revenues being hurt by measures introduced in recent years, particularly around AML, source of funds and responsible gambling.

The price of doing business in GB

The impact of these measures – which to be clear aren’t all about affordability – are given mention in a recent report from EY which was commissioned by the Betting and Gaming Council (BGC).

And it really is just a mention. According to EY, online GGY has declined since mid-2021, “probably reflecting the re-opening of physical venues, the introduction of affordability checks online, and the decline in real household incomes”. 

Even that brief mention is somewhat misleading. 

Yes, ahead of the white paper and under pressure from the Commission with regard to AML, operators have instituted a number of checks. But all the checks and processes recently introduced are largely a response to the multiple failings as detailed in the numerous regulatory settlements over the past few years.

They are not – yet – affordability checks as we understand might be included in the white paper. What the Racing Post is detailing, then, is the response from a selection of customers to checks that should have been part of the “onboarding process” in the first place.

Of course, the personnel charged with making these kind of checks might well not be explaining all that well why such processes are needed now and how the lack of such checks may or may not have previously landed the operator in question in hot water.

Further, as was clearly detailed by the Post, there is a wide disparity across operators which, it might be speculated, could be a function of exactly how much hot water said operator might have landed themselves in.

What we can say for definite is that in terms of the UK regulatory backdrop checks such as have been introduced by operators are now the price of doing business.

Crying wolf

It was curious, then, to see how the BGC handled the report they themselves had commissioned.

Even at such a late hour as mid-December, when presumably the government is merely dotting the i’s and crossing the t’s on the white paper, it took the opportunity of the report to caution about what future affordability checks would mean for the sector.

Citing a recent study also commissioned by the BGC, it said the EY report backs up recent polling which showed nearly 70 per cent of people who place a bet said they would be unwilling to allow regulated firms to carry out compulsory affordability checks to prove they can afford to wager.

Talking to iGB, a spokesperson noted that the press release accompanying the EY report had focused on a very small section of the report.

“The reason why we are focusing on affordability checks is because we know there is an active discussion going on in government at present about what kind of affordability checks should be introduced,” the spokesperson said.

The spokesperson added that should affordability measures be introduced at the level spoken about in the leaked document, then it would be “catastrophic from their point of view”.

This feels a little over-dramatic. The spokesperson was keen to suggest that the frictionless affordability checks spoken about by both the government and the Gambling Commission “aren’t there at present”.

Differing approaches to affordability

This, again, seems a little simplistic. As was noted in a recent LinkedIn post from ex-Playtech Protect managing director and BetBuddy founder Simo Dragicevic, there are in fact quite the plethora of approaches on affordability which come with a varying range of intrusiveness.

This includes geo-affordability data, Credit Account Information Sharing (CAIS) data, such as monthly credit data relating to credit card expenditure, loans, mortgages, etc and Current Account Turnover (CATO) data that provides opportunities to understand a customer’s discretionary spend. 

Meanwhile, the emergence of Open Banking is “creating opportunities to access customer data directly from their bank accounts,” he noted.

Playing a dangerous game

The BGC says the industry fears the government won’t say enough in the white paper about how affordability checks can be made as unobtrusive as possible, while the companies working in the verification sector are busy working on solutions that offer just that. 

The danger with the BGC approach is it runs the risk of making it look like the sector is running away from the opportunity to make life easier for itself. Yes, all concerned need to be careful about how affordability checks are instituted and leaving this all to the Gambling Commission would seem like a bad outcome.

But playing Chicken Little and running around with press releases screaming that the sky is falling in also seems to be a perverse tactic at this point. Especially when it is evident the current levels of check introduced voluntarily by the sector have clearly not led to the apocalyptic catastrophe the BGC warns about. It seems odd to try and persuade the world otherwise.

The current situation is reminiscent of the surfing scene in Apocalypse Now when Robert Duvall’s army major suggests almost wistfully that “some day this war’s gonna end”.

It feels like we are at this point with the white paper. While that certainly won’t be the end of the debate around the future of the UK gambling sector, it will at least hopefully bring an end to the posturing around affordability. 

Scott Longley has been a journalist since the early noughties covering personal finance, sport and gambling. He has worked for a number of publications including Investment Week, Bloomberg Money, Football First, eGaming Review and Gambling Compliance.