In the recent, sometimes ferocious, debate about affordability checks in the UK gambling industry, it is at times forgotten how dysfunctional the system we have in place today really is. Because the facts are these: the passive checks used by the industry at or shortly after registration leave millions on the table.
Let me explain why, before proposing what we might be able to do about it.
In the average compliance department today, every new customer of a gambling operator will have some form of passive affordability check performed upon them early in the customer lifecycle. For avoidance of doubt, the word ‘passive’ here indicates that the customer doesn’t know anything about these checks: the operator is looking that person up in a third-party database and using supposedly relevant information to make a decision about whether that individual can continue to stake with the organisation.
Something like these checks, by the way, are proposed in the UK gambling white paper to be mandatory at a spend of £150 or more, but the truth is that they happen in almost all cases today anyway.
What do these checks consist of? Well, that depends on the unique circumstances, but they might include data from credit reference agencies which in turn might include information on missed debt repayments, bankruptcies, court judgements, and so on. They might also refer to ONS data around average salary levels for the particular area of the country a customer lives in.
After putting all that information in the hopper, what is returned is typically a RAG score (although sometimes a number), where:
There are issues with both the red and amber scores that we will talk about in a later blog post, but for now, let’s focus on that last group.
To answer that question, it helps to understand the structure of checks like these. What they essentially involve is looking for red flags (like a person in debt, or with a very poor credit rating). So what green really means is simply “we didn’t find any red flags and the customer’s credit score and location appears satisfactory”
The more switched-on amongst you will immediately notice that this doesn’t really tell us much (or, let’s be honest, anything) about how much money any given individual can afford to spend. And operators respond to that fact in a pretty sensible way: they apply a universal limit (or in other words, a spending cap) on all their ‘green’ customers.
In practice, that means that despite getting the green light (sort of literally), there is a significant roadblock in the road ahead. Many will never reach it. But some will, and they won’t like it when they get there. In general, the traffic light system of early life checks does help to exclude some customers who are potentially at risk, but doesn’t really do much at all to open up universally applied spending caps and allow high net-worth customers to spend as they would choose: hence, they leave a significant amount of money on the table.
It is a truth universally acknowledged that making the customer journey as smooth as possible is a good thing to do. On that basis, erecting barriers in front of good customers as soon as they hit a spend limit is a problem: that’s one of the reasons why there is so much fuss about affordability checks at the moment.
On that basis, it would be a good idea to allow customers who want to bet at higher levels, and can afford to do so, to demonstrate that ability early in the lifecycle and on their own terms. It’s not as if it is complicated: Open Banking is already used by some operators during the onboarding process for purposes of ID verification or seamless payments.
All that is required is giving the option to open up spending caps and remove barriers down the line. After all, as we’ve seen in some of the debate around affordability checks, these customers tend to know who they are. Better to get a real affordability check out of the way early, rather than it becoming a requirement in the middle of Cheltenham or Royal Ascot.
It doesn’t have to be mandatory. But enough customers will volunteer to share data in order to be given an accurate spend limit, to make it worthwhile. All any sensible operator has to do is try!