Well, it is finally here. The wait is over. Or is it?
Today the UK Government’s gambling white paper was finally published. Much of it was as expected, some was more of a surprise. And whilst it doesn’t provide perfect clarity by any stretch of the imagination, it should certainly help an industry that has been crying out for some direction when it comes to precisely what is expected in player protection.
So what are the headlines (with an unapologetic focus on affordability checks), and what do they mean for operators?
First and foremost, the whitepaper has confirmed that the Government backs the UK Gambling Commission (UKGC). Going by one interpretation, the UKGC has taken the view that losses in excess of typical disposable income require some form of affordability check, and one that uses real financial data, as opposed to guesswork via credit or ONS data.
Based on our reading of the white paper, this hasn’t changed. We just have some of that much-needed clarity mentioned above. Specifically, checks that give a “much greater insight into a customer’s financial situation by accessing more personalised data to consider factors like discretionary income” are now expected to be conducted when losses are greater than £1,000 in a day (seen as “binge gambling”) or £2,000 in a 3 month period.
There is only one way to determine “discretionary income”, and that is with real financial data shared by the customer via Open Banking, or alternatively the old-fashioned manual way.
That said, there is an unusual, and to our eyes unhelpful, suggestion that there may be some way to do this via “frictionless” checks via credit reference agencies in the future. There just doesn’t happen to be one today, or at least not one available to gambling companies. So whilst it is an admirable ambition to want entirely frictionless checks, I wouldn’t want to be losing millions of pounds of revenue while I wait for a ‘silver bullet’ that may never come.
But again, the key conclusion when it comes to affordability checks is this: nothing has changed.
Elsewhere, the headline change is certainly the restriction on stakes for online slots of between £2 and £15, to be determined after - you guessed it - further consultation.
Something along these lines has been widely reported before publication, so probably doesn’t come as a huge surprise - but like the FOBT restrictions before them they are a reminder to the industry that sometimes it’s better to think about sustainability before someone else decides to do it for you.
The simple answer is ‘not much’. Most operators have already baked in affordability checks, so this will be a matter of adjusting the parameters a little and continuing as they have done before.
And whilst the changes to stake levels may cause some short-term pain, it is also true that operators have been working to protect younger players, so in many cases they will not be unduly affected. A lot of these changes have been already ‘baked in’.
But the longer answer is: a lot.
Firstly, it is worth being aware that by publicly backing the idea of affordability checks at a specific spend level, the government is helping operators. Whilst it isn’t officially yet ‘law’, nevertheless it helps when communicating with consumers to be able to state that such checks are a government requirement (and will be expected from whichever company an individual bets with). This is helpful.
Secondly, and perhaps more importantly, it is time for operators to stop hoping that affordability checks are going away, and start planning to support this function in the most effective way possible. There does remain the prospect of frictionless checks, but the fact that these are not defined in any way, after all this wait, tells you absolutely everything you need to know about how realistic that prospect is. It has taken 2 years to get here. Anyone taking bets on when these ‘frictionless’ checks appear?
Even aside from that consideration of course, any supposed frictionless affordability check will do nothing to change the requirement to perform source-of-funds checks, provide checks for those with more complex finances, and manage the broader enhanced due diligence process.
In the meantime, making the checks we DO have as frictionless as possible is important: we all know that when asked for financial data, many customers disappear. That is usually due to a combination of factors, including:
That last point reminds us why making things fast and efficient is important. If you make things quick and easy, you lose less customers. Every minute a customer has to wait, every opportunity you give a customer to think twice, you increase the chance of losing them.
So whilst up until now there’s been an understandable reluctance to spend TOO long thinking about how affordability checks are conducted, now is the time to think very carefully about how you perform these checks. Get it right (as many other industries that have embraced Open Banking already have) and you will be keeping more high-value customers than ever. Get it wrong, and you’ll see them migrate to operators that know what they are doing.
We’ve waited long enough, let’s get to work. Drop us a line and start doing affordability checks the easy way.