Can affordability be a source of competitive advantage?

Perhaps not before time, the gambling and gaming industry is taking responsible gambling seriously. And whilst nobody would deny that regulatory pressure is part of the reason for this change in attitude, it would be churlish not to acknowledge the very real efforts now taking place, all with the aim of protecting all players from serious financial difficulties relating to gambling.

Consider this statement from Flutter Entertainment’s most recent annual report:

“Throughout this extraordinary year, protecting our customers while they enjoy this legitimate pastime has been our highest priority and this commitment is embedded in our culture and values”.

Or this, from the equivalent source for Entain: 

“We continue to lead the market in the critically important area of responsible betting and gaming.”

At ClearStake, we know from first-hand experience that these are not empty words. Every operator we have spoken to is investing significant time and money into protecting their customers to the greatest extent possible. Which is as it should be.

This is all good news. And here’s some more: a focus on responsible gambling doesn’t have to harm the bottom line. In fact, it can improve it. We can’t name names, but we’ve heard reports of double-digit revenue growth - solely thanks to faster, smoother due diligence around affordability.

Let’s talk about how that happens.

Reducing churn amongst your most valuable customers

At a certain point in time, any responsible operator is required to establish whether a customer can afford to lose the amount of money they are staking. This is just a fact of life in today’s regulatory environment. 

What happens at that moment is critical to the success of your business

There are, broadly speaking, three options available:

The first is to mark that customer as a problem gambler and stop taking their money. This is rare, but not unheard of. When a customer increases their staking pattern suddenly, it can (quite rightly) be flagged by internal systems, which in turn trigger established responsible gambling protocols designed to reduce betting activity or exclude entirely.

The second is to embark on a traditional enhanced due diligence (EDD) process: ask the customer to provide pay slips, bank statements, and other documentation to prove they can afford to lose the amounts they are staking. Then evaluate these documents and return with a decision.

The third is ClearStake.

There are issues with the first two options. 

The first essentially throws the baby out with the bathwater. “Velocity” (customers suddenly staking in large amounts) is a key word when looking at betting behaviour, but it doesn’t always mean trouble, particularly just after registration. When an operator ignores this fact, and stops customers from betting larger amounts of money, it effectively sends them elsewhere. 

The second option takes time, is invasive, and customers hate it. It also doesn’t guarantee accuracy - these documents are easy enough to fake after all. We’ve been told that over 50% of customers churn during an EDD process. That’s no surprise. It can take weeks, and involve a lot of back and forth. The customer loses control of their data. No wonder so many customers conclude it is easier to just go elsewhere.

The net effect of all of this is that your best customers churn. And when a significant percentage of revenues comes from just a small number of customers (precisely the kind who have to go through EDD), that is a real problem.

Now let’s talk about option 3.

With ClearStake, you can rapidly and accurately determine what every customer can afford to lose, without requiring any more than a couple of minutes of your customer’s time. The information you get will be accurate, and most importantly it will be fast. Within five minutes, a decision can be made. 

That means your customers stay with you. They don’t get the opportunity to go elsewhere, and nor would they want to, when your EDD process is the most straightforward in the business. Even just a small reduction in the churn of high net-worth customers can be worth a huge amount to an operator. Or in other words: smarter, online affordability checks are good for business. 

Two final comments.

First, one additional advantage of ClearStake is the ability to monitor affordability on an ongoing basis. If a customer remains connected, it is possible to make future affordability decisions (in either direction) without repeating the initial sign-up process. Again, this doesn’t just mean better protection and safer gambling, it also means less churn - as there is no requirement to go back to the customer at all the next time a check is required.

Second (and perhaps most important), whilst ClearStake enables affordability checks to take place in a more timely and accurate manner than ever before, we don’t claim to be a replacement for smart internal systems that identify problem gambling. We understand that responsible operators run these systems, and ClearStake is only one additional way to guarantee customer safety. We absolutely understand that in many cases the fact that a customer can afford to bet in a particular way does not make it ok. 

However, when you do want to check: we promise to make it as fast and accurate as possible. And that’s good for your customers, and your business. If you want to make that happen, drop us a line.