We must assume that the UK government's white paper on the future of gambling regulation will be published soon. The long-overdue review of the Gambling Act has been hampered by changes in ministers in charge and apparent second thoughts inside a number of government agencies.
Following multiple leaks, the final white paper's contents will most likely come as little surprise, particularly what it says regarding affordability checks. According to what we know, a two-tier system of checks that operators will be required to do will be implemented.
The less intrusive tier would include checks on secondary sources such as County Court judgements to ensure a player's name does not have evident black marks against it. This tier would begin at a monthly cost of £125 or a yearly cost of £500.
According to the July document, the higher tier would entail "more extensive examination of a customer's financial status" utilising techniques such as Open Banking. The triggers in this tier are more subtle, and, according to the leaked document, would include checks on anyone who has £1,000 in 24 hours or £2,000 in 90 days.
New clients will also be scrutinised if they spend £500 in 24 hours or £1,000 in their first 90 days. The new customer triggers will apply to all under-25s, regardless of how long they have been with an operator.
Unfortunately, that is all we, or any consumers, know about affordability checks. We'll have to wait until at least January for more information.
The game’s gone
That hasn't stopped speculation about the impact such inspections would have on UK punters.
According to a recent Racing Post piece, there is significant scepticism among the betting public regarding how they will react to the idea of affordability checks.
If any form of check is introduced, "the game is over for me now," according to one punter. Another stated that it was "pointless" to continue in the face of such vague invasions.
Another remark was plainly libertarian in nature. "It boils down to asking for proof of cash and, in particular, bank statements, which I will not give to anyone," the punter explained. "I wouldn't share my bank statements to my brother."
Such reactions have definitely shook the sector. However, as the Post articles show, the concern about affordability checks is mostly due to efforts previously done by the operators.
As several UK operators have stated in recent trading statements, recent measures, particularly those relating to AML, source of funds, and responsible gambling, have harmed their collective earnings.
The cost of doing business in the United Kingdom
The impact of these policies, which aren't entirely about affordability, is mentioned in a recent EY report commissioned by the Betting and Gaming Council (BGC).
And it's only a passing mention. According to EY, online GGY has dropped since mid-2021, "possibly reflecting the re-opening of physical venues, the adoption of affordability checks online, and the decline in real household incomes".
Even that little reference may be misleading.
Yes, ahead of the white paper and in response to Commission emphasis on AML, operators have implemented a number of checks. However, all of the latest checks and processes are essentially a response to the various errors documented in the several regulatory settlements over the last few years.
They are not, as far as we know, affordability tests, which may be included in the white paper. What the Racing Post is describing is a customer's reaction to checks that should have been part of the "onboarding process" in the first place.
Of course, the employees in charge of performing these checks may not be articulating why such processes are required now and how a lack of such checks may or may not have previously put the operator in hot water.
Furthermore, as plainly noted by the Post, there is a huge disparity across operators, which could be a result of how much hot water that operator has gotten themselves into.
What we can say with certainty is that, in the UK, regulatory background checks such as those implemented by operators are now the cost of doing business.
It would be interesting to know how the BGC handled the report they had commissioned.
Even at such a late date as mid-December, when the government is probably just dotting the i's and crossing the t's on the white paper, it used the research to warn about what future affordability checks will entail for the sector.
According to the EY analysis, which was based on a recent study commissioned by the BGC, nearly 70% of customers who place a bet stated they would be unlikely to enable regulated firms to conduct mandatory affordability checks to establish they can afford to wager.
A spokesman for EY said that the press release accompanying the report had focused on a relatively tiny area of the report.
"We're focused on affordability checks because we know there's an active discussion going on in government right now about what kind of affordability checks should be implemented," the representative explained.
The representative went on to say that implementing affordability measures at the level mentioned in the leaked document would be "catastrophic" from their perspective.
This is a little too dramatic. The spokeswoman was careful to highlight that the seamless affordability checks alluded about by both the government and the Gambling Commission "aren't there at present".
Various methods to affordability
Again, this appears overly simplistic. As mentioned in a recent LinkedIn article by ex-Playtech Protect managing director and BetBuddy founder Simo Dragicevic, there are a variety of ways to affordability with differing degrees of intrusiveness.
This comprises geo-affordability data, Credit Account Information Sharing (CAIS) data, such as monthly credit data relating to credit card usage, loans, mortgages, and so on, and Current Account Turnover (CATO) data, which enables understanding of a customer's discretionary expenditures.
In the meantime, the rise of Open Banking is "providing chances to access client data directly from their bank accounts," he says.
Playing a risky game
According to the BGC, the industry is concerned that the government will not say enough in the white paper about how to make affordability checks as unobtrusive as possible, while businesses in the verification sector are hard at work developing solutions that do just that.
The concern with the BGC approach is that it gives the impression that the sector is avoiding the potential to make life simpler for itself. Yes, everyone involved must be cautious about how affordability checks are implemented, and entrusting this to the Gambling Commission appears to be a bad idea.
However, acting like Chicken Little and rushing around with press releases shouting that the sky is falling in appears to be a perilous strategy at this time. Especially when it is clear that the current levels of check implemented voluntarily by the sector have not resulted in the apocalyptic disaster predicted by the BGC. It seems strange to try to persuade the rest of the world otherwise.
The current situation is similar to the surfing scene in Apocalypse Now. Now, when Robert Duvall's army major says almost longingly, "someday this war's going to stop," it's almost wistful.
We appear to have arrived at this point with the white paper. While this will not be the end of the argument about the future of the UK gambling industry, it will hopefully put a stop to the posturing about affordability.
By fLEXI tEAM