What are affordability checks, anyway?

Well, it had to happen sooner or later. 

UK Prime Minister Rishi Sunak has announced his intention to move forward with the Gambling review. Although we can’t yet be absolutely certain what this will entail, it appears that maximum stakes for online casino and fixed-odds games are likely to be recommended, with that level being set somewhere in the £2 to £5 range.

Here’s where things get really interesting, however. The purpose of these limits (and other affordability-related measures accompanying them) is to protect against ‘unsustainable losses’ on the part of consumers. On this basis, only those customers who can afford to bet more will be permitted to do so.Can 

How will an operator determine who those customers are? Well, the exact mechanism has not yet been determined, but the suggestion that such checks will be ‘non-intrusive’ at least gives us a hint. And it raises the question as to what ‘affordability checks’ really are - something discussed below.

But before getting to that, let’s take one moment to state the obvious:

When it comes to assessing affordability and protecting customers from life-changing losses, the time to act is now. There is a strong feeling that with both the Government and the Gambling Commission aligned, the days of taking any significant amount of money from any customer are in the past. 

Obviously we would say that. It’s what we do, after all. But we make no apology for reminding operators that muddling along in the hope that the gambling review will be softened or scrapped entirely is not a strategy any longer. Affordability checks are coming. The only question is what precisely they look like.

What will affordability checks in gambling look like?

The short answer is that we don’t know. But we can speculate. I would begin by noticing the central tension between checks that are ‘non-intrusive’ and those that prevent ‘unsustainable losses’.

To do the latter, it is necessary to have a pretty comprehensive understanding of a customer’s finances, an understanding that to my mind must include both a level of confidence around income and savings, and an understanding of outgoings and other financial commitments such as debts. 

The best way to argue that case is to consider the alternatives.

A credit score, for example, does a great job at telling a lender whether an individual is likely to repay debt, based on empirical evidence. In other words, this individual has a history of repaying debt consistently, and does not have significant enough debts today to jeopardise that track record. 

It tells us absolutely nothing about how much or little an individual can afford to lose when gambling. You may think that is an exaggeration, but it absolutely is not. Credit scores do not look at salaries, they do not look at savings, and they do not look at typical expenses. For the type of affordability checks that are being proposed, such an approach is worthless.

A little better is the payslip. This can give us some idea about what someone earns. But again, it tells us nothing about an individual’s savings or outgoings. The truth is that an individual on almost any salary (assuming they are still receiving it of course, which is a whole other question) can get into serious financial trouble. 

So whilst there will certainly be a role for checks such as these, it is very difficult to understand how they will prevent the sort of tragic stories of harm that the Prime Minister wishes to avoid. Let’s look at what will.

‘Real’ affordability checks

There’s no need to over-complicate the issue. A meaningful affordability check, that truly protects players from serious harms, has to do the following:

• Understand the genuinely disposable income of the individual player at that moment in time
• Identify the level of savings available to the player
• Measure the customer’s staking level against the above

This should be relatively obvious. It is simply the basic information that is required to answer the ‘can this customer afford to stake this amount?’ question. And that is the question that must be answered. 

So how is this information collected? It can only be done so based on real bank data. Unless I am missing something, it feels impossible to me to answer that fundamental question without checking real-world financial data. 

It would help the industry to accept that this will be the case. Because a sustainable industry cannot tolerate the continued bad press that plays into the hands of those who would be happy to see the entire gambling sector go under. Hoping that passive checks might be enough is just kicking the can down the road - it is time to step up and lead.

That said, we should recall that Rishi Sunak did reference ‘non-intrusive’ checks. Can checks based on real financial data ever meet that description?

Non-intrusive, but real, affordability checks

We believe that the answer is yes, and here’s why.

Firstly, it is now incredibly easy for customers to share financial data, in particular via Open Banking. In practical terms, a couple of clicks of a mouse can hardly be considered to be ‘intrusive’ when it comes to the demands on anybody’s time.

Secondly, and far more importantly, it is possible to take the data shared with Open Banking, perform the calculations necessary to determine disposable income and savings, and then recommend a decision based on the staking level of the customer, all without the operator themselves seeing details of bank statements and transactions.

In other words, a customer can share financial data safely and securely (and easily) with a trusted third party, who can then provide reassurance to the operator that it is safe to accept their business. That, to our mind, is non-intrusive. 

So affordability checks that truly protect customers, in a way that gives both government and operators confidence, are possible. And yes, they can be non-intrusive. If you’d like to discover more about exactly how that can be delivered, get in touch.

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