Getting comfortable with affordability checks

It is not just gambling operators grappling with the implications of affordability tests. Consumers are sure to ask why betting and gaming operators need to know the level of personal information that such checks entail. As the industry is pushed ever further on the issue of how much they truly know about their customers, how can technology both enable and ease the way to better systems and practices in this area? By Scott Longley

Affordability checks for online gambling operators in the UK is a concept whose time would appear to have very much arrived. For more than a year, the issue of affordability has been bubbling under as an area of regulatory interest and with the Covid-19 lockdown it rose to the surface.

In May, the GB Gambling Commission said in its additional interaction guidance that operators should conduct affordability assessments for any players “picked up by existing or new thresholds and triggers which indicate consumers experiencing harm.” Limits or blocks should be applied until these checks are concluded.

Then in June the Commission went further in its guidance for interaction with high-value customers (VIPs).

“Licensees should be taking steps to ensure all customers are gambling with money they can afford to lose (lawfully acquired disposable income) and without experiencing harm,” the guidance said. “For the general customer base, this assessment requires a risk-based approach often with the use of thresholds or triggers to alert licensees to the need for additional customer checks.”

The Commission clearly feels that affordability tests are a level of compliance whose time has come. As David Clifton, partner with legal consultancy Clifton Davies, says the previous need for gambling operators to know their customers has been “superseded by ‘understand your customer.’”

Pressure for change It isn’t difficult to spot where the impetus for affordability checks comes from. “The most obvious pressures are those that stem from public, political, and regulatory criticisms of the industry for not having sufficient KYC checks and, consequently, adequate player-protection measures in place,” says Clive Hawkswood, former chief executive at the Remote Gambling Association (RGA) and now non-executive director at responsible gambling data provider beBettor.

“That goes beyond affordability checks and covers all areas where operators might be better able to use the data they hold to analyse player behaviour and intervene where appropriate.”

Affordability checks mark the frontier between what was being done before and where we might be heading, suggests Scott McGregor, the chief operating officer and co-founder of beBettor.

“There are only so many checks that can be done manually whereas technological tools are able to check hundreds of thousands of customers per day, providing additional intelligence on those customers,” he says.

McGregor points out that geo-affordability checks are an effective “first-screening tool; it makes an assessment on any given individual based on largely open source income, demographic and property data but, crucially, without invading an individual's privacy, affecting one’s credit score or leaving marks behind on any records”.

TransUnion, which has its own affordability product for use by the gaming sector, says it uses a combination of individual-level financial data along with socio-demographic and property data.

It is an example, says the company’s head of gaming Adam Hancox, of how software and data can support gaming operators in protecting customers from gambling-related harm. “It helps them to better understand their customers, attribute the right levels of support and remain compliant,” he adds.

“We’ve realised in the last few months as the affordability regulation keeps coming, operators have different needs,” says McGregor. “Some want our scores and discretionary income estimates to use as guidelines and thresholds. Others want access to our maintained source data for use in their own models.

"Ultimately, we realise we’re part of a layered approach to affordability and when customers breach thresholds there will always be an escalation step, whether that is enhanced due diligence or other customer interaction”

He points out that beBettor sees itself as “part of operators larger responsible gaming framework.” Everything is contingent, he adds. “We assist with the heavy lifting at the front end. Operators need to take a risk-based approach.

"You don’t need to perform source-of-funds checks on every customer, but getting an earnings estimate and supporting data at the front end is helpful. It puts the customers future gambling activity into context.”

The safety-belt approach If operators have, as Clifton says, “got the message” on affordability checks, the same is perhaps not quite the case with the consumer. In a general atmosphere of distrust over personal data sharing, the potential for consumers to be nervous against giving over more information than was previously the case is likely to be high.

“I can understand why some customers will have such fears,” says Clifton who believes the Commission could be doing more to explain to consumers why operators are asking what would appear to be some “extremely intrusive questions” about their personal financial situations.

He points out that at present all the Commission’s own website says about it is on an FAQ page which itself then points users to a Gambling Commission Enforcement report on affordability and consumer protection. “That’s hardly the most user-friendly or satisfactory explanation from a regulator that takes pride in placing the consumer at the heart of gambling regulation,” he says.

McGregor points out that at the level of the consumer, the imposition of an affordability check needn’t be intrusive.

“The reality is a lot of customers will not realise that an affordability check has been undertaken,” he says. “It’s a bit like a seatbelt - if it’s comfortable, you forget you are wearing it.”

He points out that the data sources that are looked at by the beBettor system are open data sources such as housing and negative financial registers such as bankruptcy data. “This isn’t Big Brother; people leave indicators and we are putting that at the disposal of the operators,” he adds.

“This is aggregated and anonymised public data which can be used as a yardstick.”

Still, given the wider levels of unease on the part of the public with regard to data-sharing at any level, let alone such a sensitive area as finance, Hawkswood suggests that the industry can also do something to allay worries.

“A good example of how that could be done was when betting shops produced a leaflet to hand to customers when money laundering checks were made,” he points out. “It was in plain English, explained what the regulatory requirements were, what would be done next, and that all betting shops adopted the same approach.

“It is easy to see from a consumer perspective that this would be much more accessible and persuasive than lines of legalistic text that are hidden away in some much longer list of terms and conditions.”

Scott Longley has been a journalist since the early 2000s, covering personal finance, sport and gambling. He has worked for a number of publications including Investment Week, Bloomberg Money, Football First., eGaming Review and Gambling Compliance. Scott now runs his own editorial consultancy, Clear Concise Media, and writes for a number of online and print titles.