Why affordability checks are inevitable (and not just in gambling)
It’s always nice to enjoy coverage in the press, particularly when it is as comprehensive and positive as the story covering ClearStake in the Racing Post this Tuesday. That publication understands, as do we, that whether most bettors like it or not ‘gambling harm’ is not a problem that is going away. Given that is the case, managing it is of central importance to operators.
Based on a few responses to the piece on social media, not every punter understands this situation. That isn’t necessarily surprising. We understand why affordability checks as an abstract concept strike some as unnecessary and invasive. If you are, as I am, a relatively low-stakes bettor who is in it for the sport, then the whole subject of sharing your financial data in order to bet may seem absurd.
But if you are one of those people, the chances of ever coming across one of these checks is extremely low. In fact, many are probably unaware that checks involving the sharing of financial information already happen today. They have to: international money-laundering laws and regulatory guidance demand it. And both the operators and the customers they affect know just how frustrating they can be.
Make no mistake, this isn’t a new thing - it is a current requirement. In this light, proper affordability checks can be seen as an additional piece of analysis added to a current process. We are not creating unnecessary processes, simply offering a much better way of doing that which is already done today whilst preparing operators and their customers for any increase in regulatory demands.
Besides, operators are not cheerleading for additional affordability checks. They understand their social responsibilities of course, and they are actively engaging to ensure their product produces as little social harm as possible. But do they want to check the finances of every customer? Absolutely not.
In other words, the idea that operators are pushing for these checks, in order to get more data on their customers or use them as an excuse to close accounts, is miles off target.
Most operators we speak to want to see as little data as possible, or most accurately, as much data as they need to make a decision, and no more. Many are keen to get to a point where a tight API integration with their own platform returns a recommended decision from a third-party platform like ClearStake and they ‘see’ nothing at all. And I don’t think I am giving away any trade secrets when I say that risk departments already have the ability to restrict or close customers for any reason they choose.
So why are affordability checks happening? For the simplest and most obvious reason in the world:
Because they have to.
In the UK, both the Government and the regulator agree that when it comes to gambling, it is important to be sure that consumers are able to afford to bet in the way they do. And can you blame them? You would have to be living under a rock to still believe that gambling is an entirely benign activity that has no potential to cause serious harm: to individuals, to their families, and to wider society. This fact cannot be wished away.
A shorthand often used to summarise the situation the industry finds itself in today is the question “cigarettes or alcohol?”.
The latter is seen as a product that forms a part of most social lives, but that nevertheless needs to be regulated to avoid the harms that we all know it can cause, harms that the industry acknowledges and manages.
The former is slowly being regulated out of existence and is not long for this world.
Everyone involved in the gambling industry wants to be alcohol rather than tobacco.
And we can make that happen. But doing so means engaging proactively with the challenges that the industry has. As accurately summarised by Michael Dugher, CEO of the Betting and Gaming Council, “If you want betting to be treated like alcohol, you need a tough regulatory approach that prevents young people accessing it, that ensures responsible and strictly regulated advertising, that needs to do more to better educate people and raise awareness of the dangers”*
This is something that operators, to their credit, are well aware of. Hence their desire to look at smarter and more effective ways to manage the affordability checks they know are inevitable.
It isn’t a conspiracy: it’s just good business. Such good business that affordability will be a fact of life beyond gambling in the future.
The world beyond gambling
More and more of our life is online: Covid only accelerated that trend. And when commercial relationships move online, so does the requirement to know your customer (to be clear, the phrase ‘know your customer’ applies in both the plain English sense and the legal ‘KYC’ sense in this context).
Back in the mists of time, a local shopkeeper (or indeed bookmaker) instinctively knew each customer, could advance credit with confidence, and turn away the business of a friend spending beyond their means. That is no longer true online. We have to gain that knowledge in some other way.
Meanwhile, finances are becoming ever more complex.
A frequent objection to affordability checks (one that was raised in response to the Racing Post article) is that ‘punters are not borrowing money to bet’, which makes them a different proposition to the checks that take place before a loan or mortgage.
But of course it is impossible to know whether a customer is borrowing to fund their gambling. Indeed, this is precisely why checks are required - to establish (among other things) that they are not. And perhaps more significantly, this logic applies wherever commerce is online.
Between mortgages, loans, credit cards and ‘buy now pay later’ purchases, the average person owes more today than ever before. There are a potentially limitless number of organisations with a claim on an individual’s future income. Isn’t it imperative for ANY lender or indeed retailer (for significant purchases) to understand the true financial position of that customer?
In many future contexts ‘responsible retail’ will ultimately incorporate some form of affordability analysis across the board. When we only know each other online, a way will have to be found to establish that neither party in a transaction is taking advantage of the other.
Which leads me to one final point: the reluctance to sharing personal data is greatly over-stated. A product like ClearStake is designed to give consumers more control, not less. And we believe that people understand the difference. As Open Banking becomes increasingly normalised, just ‘something you do’, it will become second nature to share some information in order to get what we need whilst being protected from financial harm.
And that should be good news for everyone.
*He doesn’t however, go as far as supporting sensible affordability checks at higher staking levels - we believe he should.
