Affordability checks have been in place for UK gamblers since 2021. The government is also updating current gambling laws to fit the modern age of internet gambling (the last Gambling Act was in 2005 and is now considered outdated). One of the key elements of this legal overhaul will be more stringent affordability checks, a single customer view (with data sharing across operators), and potentially per-player budgets. But is this, along with the current system, a step too far and an invasion of privacy for customers?
What’s the status of current affordability checks?
Since 2021, UK operators have had to undertake affordability checks for players before betting. Casinos also verify a customer’s age and identity as part of the sign-up procedure. When the UKGC first introduced affordability checks, it was quite the turnabout as previously operators had not had to ‘systematically consider customer affordability’. However, this situation led to many players spending more than they could afford and operators not identifying unsustainable spending early enough.
Bookmakers, casinos and slot sites must now know their customers are financially solvent and can afford to spend money at their sites. These checks can include asking for bank statements, payslips, and other supporting documents and could also involve using a credit reference agency to verify the information. When undergoing said checks, operators must also ‘be aware of the difference between “disposable income” and ‘discretionary income”’.
The affordability check rules discussed in the preceding paragraphs are now outdated; they expired in September 2022. The newer Social Responsibility Code Provision 3.4.3 for remote gambling operators (which addresses customer interaction and affordable gambling) replaced the guidance. Additionally, the upcoming UK white paper is set to further shore up affordability check regulations for operators, potentially introducing a single customer view that allows all operators to access specific customer data and per-player budgets.
However, this has been met with opposition from gambling stakeholders, namely the Betting and Gaming Council (BGC) and players, who say it will encourage offshore gambling as consumers do not want to share this data (we’ll come back to both points later).
Are affordability checks warranted?
If pre-2021, there weren’t official forms of affordability checks in place (instead, casinos set thresholds for players as indicators of harm and overspending), what changed, and why were they warranted in the eyes of the UKGC and government regulators? The answer is a series of events that caught the UKGC’s and public media’s attention related to problem gamblers, overspending and non-action to prevent this on the part of operators.
In 2020, a parliamentary select committee report on the social and economic impact of the gambling industry entitled, Gambling Harm—Time for Action detailed that ‘60% of its [the gambling industry] profits come from the 5% who are already problem gamblers, or are at risk of becoming so.’ This figure formally recognised an ongoing issue that had already been highlighted through a series of UKGC fines and the threat to remove VIP and loyalty schemes should operators not ‘clean up the malpractice’.
What was happening with VIP schemes? Online casinos had been allowing players to overspend when it wasn’t sustainable or affordable, access VIP schemes, and they were not acting on problem gambling indicators (see the case of Betway or Bet365), instead proffering more bonuses and encouraging further gambling. This led to mainstream media attention on a string of cases where gamblers had been allowed to gamble away their life savings, get into debt or steal money to facilitate their gambling addictions (this is also one of the reasons for the 2020 credit card ban on UK gambling).
Essentially, the industry had created a scenario where gamblers were incentivised with bonuses, checks were not in place, and those vulnerable to gambling addiction were falling through the safety nets that existed at the time.
The case against affordability checks
Despite affordability and source-of-fund checks already being in place, the upcoming white paper has drawn more attention to the issue and, equally, more opposition as players and operators remain unclear on what the new legislation will look like.
While it is recognised that casinos, slot sites, and sportsbooks need to assess risk and ensure customers are not spending more than is normal or sustainable (as this points to problem gambling), many critics ask whether it should be up to casinos to tell customers how much they can spend on their hobbies? Surely, a casual gambler’s disposable income is their own affair? And let’s face it, any form of affordability or credit check is an invasion of privacy. Aside from money-lending, no other commercial industry has such invasive standards in place.
Many, including the majority of UK operators who play by the rules, feel that, while regulations are needed to protect players from harm, they must also ensure that customers’ privacy and choices to spend as they wish are respected. But how could casinos achieve this? Perhaps, by inputting reasonable per-player thresholds and only performing in-depth checks when players exceed their threshold: this, however, seems far too familiar with the pre-2021 system, which saw a select few gambling operators not restrict or limit players who were clearly overspending.
The opposition from players to potentially invasive affordability checks is captured in research conducted by Ernst and Young on behalf of the Betting and Gaming Council (BGC), which states that ‘nearly 70% of people who place a bet said they would be unwilling to allow regulated firms to carry out compulsory affordability checks to prove they can afford to wager.’
The BGC has also argued that earlier research across major EU gambling markets demonstrates a correlation between rising regulatory standards and increased offshore gaming. Hence, concern from operators that the UK is reaching or has already surpassed the point of overregulation is running high. Countries like Germany, which already have strict measures, have been widely criticised.
The bottom line
There are no two ways around it: affordability checks are a direct invasion of consumers’ privacy and are another long line of UKGC measures that affect the many UK gamblers who gamble responsibly and infrequently to protect the few that struggle with addiction. The gambling industry often argues against regulation, touting the UK’s current 0.2% rate of problem gamblers. However, at the heart of the logic behind recent regulations is the acknowledgement that 0.2% of the UK population is hundreds of thousands of people, whose lives are significantly impacted or destroyed by gambling every year. For example, there are over 400 gambling suicides annually; these players are worth protecting.
This is not to say that players do not have the right to be concerned (but offshore gaming is not the right answer as it exposes players to greater risks). In fact, as commercial entities focused on profit generation, gambling operators are not the best parties to hold such in-depth financial data on consumers. In 2022 alone, DraftKings, FanDuel and BetMGM were all subject to data hacks, and that’s just the start of things; there are also data sharing and other ethical issues created by the commercial nature of operators – they are not impartial.
So what’s the solution when the UKGC has made clear its stance that the threat of a growing black market will not deter it from correctly and appropriately regulating in the interest of vulnerable players? We recommend it is better for the entire industry, players included, to get on board, advocating for better regulations and highlighting their privacy concerns, rather than using the operator-led language of economics, which is an argument not accepted by regulators.