Recent Parliamentary scrutiny of the affordability of gambling for vulnerable customers has led to the Gambling Commission opening a consultation on that same subject last week. Andrew Cox shares his perspective on the direction of legislative travel and the key issues at stake.

The UK Gambling Commission (UKGC) last week launched a consultation on the industry’s customer interaction requirements and how remote operators are implementing these to protect potentially vulnerable customers from gambling-related harms. Hot on the heels of the recommendations made in July’s report from the House of Lords Select Committee on the Social and Economic Impact of the Gambling Industry (the HoL Report), and June’s report from the Gambling Related Harm All Party Parliamentary Group (the APPG Report), the consultation also seeks evidence and views on the imposition of stronger requirements that operators conduct defined affordability assessments.

The ‘A’ Word

The concept of checking for “affordability” is not new within the industry. The current Licence Conditions and Codes of Practice (LCCPs) require all licenced operators to have, and put into effect, policies and procedures intended to promote socially responsible gambling. They also require that licensees identify and interact with customers who may be at risk of experiencing harms associated with gambling.

Affordability is one of the criteria by which operators are expected to identify potentially vulnerable customers and behaviours, for example through making judgments about the likely level of disposable income of a customer, or through recognising potentially harmful gameplay markers such as accruing significant losses or increasing stakes. An assessment of a customer’s ‘affordability’ will then inform the threshold at which interaction or other interventions should be triggered.

Defining and Measuring Affordability

Currently there is no defined threshold for an operator to initiate interaction with a customer based on affordability concerns, nor is there a prescribed method of measuring affordability.

The UKGC has previously advocated the use of statistical and demographical data, combined with personal details gained by the operator during the customer sign up process. However, such an approach would not provide an industry-wide standard, nor would it comfortably cater for customers who are wealthier or less well off than the average person in whatever demographic had been selected for the affordability assessment.

Without a standardised approach, there are also concerns that customers would simply be incentivised towards operators with the highest thresholds in a “race to the bottom”, thereby undermining the intention of the LCCP requirements entirely.

Recommendations already on the table

Both the HoL Report and the APPG Report recommended stronger requirements centred around affordability.

The HoL Report recommended tightening the current requirements to make it clear that it is for the operator to consider customer affordability and to define the minimum steps which they should be required to take in order to enable the identification of customers who are betting more than they can afford. Where such a check raises a red flag, that information should be shared with all other licensed gambling operators who will also be bound to act on the information as if they had undertaken the affordability check on that customer themselves.

The APPG Report went further, arguing that gauging affordability could not be left to gambling operators, and that limits should instead be set by the Gambling Commission.

The introduction to this new consultation hints at the types of measures that are now being considered by the regulator. For example the UKGC propose to impose requirements on operators to conduct defined affordability assessments at thresholds set by the Commission. There is currently no further detail as to how these might work in practice, whether the threshold would be a blanket threshold regardless of whether it falls below or above an affordability assessment undertaken by the operator, or the nature of the assessment undertaken by the Commission.

The UKGC’s Consultation and Call for Evidence

The overview of the consultation makes it clear that one of the UKGC’s key concerns is the level of the thresholds that are being set before customer interaction is deemed necessary in accordance with the LCCPs and the apparent failure of affordability checks to properly inform these thresholds. This is where the various issues around the definition and measurement of risk markers, such as affordability, will require carefully thought through proposals to balance the need to protect customers from harm with consumer freedom and the practicalities of making informed assessments.

All interested stakeholders are encouraged to take part in the consultation and call for evidence, which closes on 12 January 2021 and can be accessed here.The UK Gambling Commission (UKGC) last week launched a consultation on the industry’s customer interaction requirements and how remote operators are implementing these to protect potentially vulnerable customers from gambling-related harms. Hot on the heels of the recommendations made in July’s report from the House of Lords Select Committee on the Social and Economic Impact of the Gambling Industry (the HoL Report), and June’s report from the Gambling Related Harm All Party Parliamentary Group (the APPG Report), the consultation also seeks evidence and views on the imposition of stronger requirements that operators conduct defined affordability assessments.

The ‘A’ Word

The concept of checking for “affordability” is not new within the industry. The current Licence Conditions and Codes of Practice (LCCPs) require all licenced operators to have, and put into effect, policies and procedures intended to promote socially responsible gambling. They also require that licensees identify and interact with customers who may be at risk of experiencing harms associated with gambling.

Affordability is one of the criteria by which operators are expected to identify potentially vulnerable customers and behaviours, for example through making judgments about the likely level of disposable income of a customer, or through recognising potentially harmful gameplay markers such as accruing significant losses or increasing stakes. An assessment of a customer’s ‘affordability’ will then inform the threshold at which interaction or other interventions should be triggered.

Defining and Measuring Affordability

Currently there is no defined threshold for an operator to initiate interaction with a customer based on affordability concerns, nor is there a prescribed method of measuring affordability.

The UKGC has previously advocated the use of statistical and demographical data, combined with personal details gained by the operator during the customer sign up process. However, such an approach would not provide an industry-wide standard, nor would it comfortably cater for customers who are wealthier or less well off than the average person in whatever demographic had been selected for the affordability assessment.

Without a standardised approach, there are also concerns that customers would simply be incentivised towards operators with the highest thresholds in a “race to the bottom”, thereby undermining the intention of the LCCP requirements entirely.

Recommendations already on the table

Both the HoL Report and the APPG Report recommended stronger requirements centred around affordability.

The HoL Report recommended tightening the current requirements to make it clear that it is for the operator to consider customer affordability and to define the minimum steps which they should be required to take in order to enable the identification of customers who are betting more than they can afford. Where such a check raises a red flag, that information should be shared with all other licensed gambling operators who will also be bound to act on the information as if they had undertaken the affordability check on that customer themselves.

The APPG Report went further, arguing that gauging affordability could not be left to gambling operators, and that limits should instead be set by the Gambling Commission.

The introduction to this new consultation hints at the types of measures that are now being considered by the regulator. For example the UKGC propose to impose requirements on operators to conduct defined affordability assessments at thresholds set by the Commission. There is currently no further detail as to how these might work in practice, whether the threshold would be a blanket threshold regardless of whether it falls below or above an affordability assessment undertaken by the operator, or the nature of the assessment undertaken by the Commission.

The UKGC’s Consultation and Call for Evidence

The overview of the consultation makes it clear that one of the UKGC’s key concerns is the level of the thresholds that are being set before customer interaction is deemed necessary in accordance with the LCCPs and the apparent failure of affordability checks to properly inform these thresholds. This is where the various issues around the definition and measurement of risk markers, such as affordability, will require carefully thought through proposals to balance the need to protect customers from harm with consumer freedom and the practicalities of making informed assessments.

All interested stakeholders are encouraged to take part in the consultation and call for evidence, which closes on 12 January 2021 and can be accessed here.