Affordability checks are not at all popular with UK gamblers. Many feel that it is an invasion of privacy and licensed gambling companies fear they will drive players to the unlicensed black market. The UK Gambling Commission (UKGC) have revealed details of their pilot scheme on checking financial risk among gamblers.
August 2024 saw the UKGC launch their pilot scheme for financial risk checks. This was a major part of the White Paper on gambling reform that was published by the Conservative government in 2023.
According to gambler media, In the first phase of the pilot, checks took place when a gambler made net monthly deposits totalling £500. At that stage, it was possible for UK’s gambling operators to be able to contact credit reference agencies. The aim of this was to find out if the customer was actually able to deposit and possibly lose the amounts that they were depositing.
It’s this kind of action that makes such checks unpopular with gamblers. This is particularly so when a player is of the opinion that they do not have a problem with their gambling and can afford the amounts being deposited.
That’s why it is so important for the checks to be what are termed ‘frictionless.’ The UKGC said 95% of the checks seen in the first phase fitted that description.
The second phase saw around 1.7 million assessments being carried out on approximately 860,000 accounts 97% of those were considered by the UKGC to be “frictionless” with three credit reference agencies being used.
Both of those percentages are above the 80% that was estimated in the White Paper published two years ago. Even with that lower percentage, there was concern over protecting the privacy of players. The UKGC have said that the reason for the higher percentages could have been caused by more up-to-date data from operators in stage two.
Helen Rhodes is the Director of Major Policy Projects at the UKGC. Speaking about the findings, she said that they have “helped us understand the extent that assessments could be conducted in a frictionless manner.”
The plan now is to “further explore data consistency across credit reference agencies.” They will also give support to operators aimed at identifying “the severity of financial difficulties” possibly being experienced by a customer and how they could be supported.
Looking at the data that has been shared by two of the three credit reference agencies has proved to be extremely useful. They showed that customers who met the thresholds were more likely to see a direct risk flag triggered and allow operators to then receive data.
Customers who had triggered assessments were between two and four times more likely to have a debt management plan in place. They were also between two and five times more likely to have defaulted in the previous 12 months when a comparison was made with the wider UK population.
Focus now turns towards stage three of the pilot. This is now at the reporting stage with analysis ongoing. The aim is to use the data collected to look at how those at the highest financial risk can have checks targeted at them.
The UKGC also says that they want to explore “how any unnecessary inconsistency between credit reference agencies could be reduced.” Looking at how operators can be supported “in any future implementations” is also important.
Whether customers can afford the amounts they are gambling and potentially losing is a controversial subject. The UKGC have on several occasions fined online sites that they have granted licenses to for failures in this area. This can happen if an operator is found to have not made sufficient checks when large amounts are being deposited, especially over a short period of time.
While it is accepted that stricter regulation is needed for the gambling industry, the government has a difficult task. They have to ensure that protection is given to those players that are suffering from or in danger of experiencing gambling harm. At the same time, they must respect the fact that most of the people who gamble do so safely and responsibly.
The fear of the UK gambling industry is the reaction of players who dislike financial checks and other measures such as new maximum stake limits for online slots. Many decide to leave the licensed and regulated sites and go to the black market. Those unregulated sites offer lower levels of customer protection and also cost the licensed operators revenue.
2024 saw the Betting and Gaming Council (BGC) release a study that revealed that up to £4.3 billion was staked by 1.5 British gamblers on the black market. Their CEO is Grianne Hurst and she has stated that the new Labour government must “guard against overbearing regulations which risk driving punters into the arms of illegal operators.” Hurst stressed that “balanced regulations and a stable tax regime” are the best defences against “the black market menace.”