Facts or Friction?
What's really on offer from 'frictionless' affordability checks?
Welcome to the latest edition of Pinchpoint, your go-to source for news and practical insights into affordability and financially responsible gambling.
Frictionless affordability checks have a powerful allure: the idea that gamblers can simply tick a box and operators can access all the income, spending and credit history they need to identify those playing beyond their means.
With such checks likely to feature heavily in the White Paper, now would be a good time to dig a little deeper into what’s really on offer to operators and their customers.
Can you really get the facts without the friction?
SCOR on the doors
The “frictionless affordability” data now being promised to the gaming industry comes primarily from the consumer lending industry. Every time we apply for credit, the instant decision comes courtesy of a complex ecosystem of lenders and risk evaluation services that operate a voluntary mutual data-sharing agreement that allows an individual’s credit history to be visible to all participating lenders.
This pooled data - a kind of borrowing single customer view, if you like - is currently only available to lenders who also contribute records to the scheme. This is something the credit agencies are lobbying hard to change, so it can be made available in some form to gambling companies.
The pact which allows for data sharing is coordinated by a group called the Steering Committee of Reciprocity. Membership is voluntary, but representation is wide (although it didn’t, until very recently, include Klarna which has over 50% of the buy-now-pay-later market).
Created by the credit industry some 20 years ago, SCOR (geddit?) provides a forum for trade associations, credit reference agencies and lenders (but not borrowers) and a rulebook of principles “for the prevention of over-commitment, bad debt, fraud and money laundering, and to support debt recovery and debtor tracing, with the aim of promoting responsible lending.”
Wrestlemania
Credit agencies are busily developing products that wrap this data up with other information, such as postcode income databases, which they hope to sell to gaming businesses as the silver bullet of frictionless affordability checks. But before they can come to market, they need to persuade SCOR - and all the trade bodies - that they should allow it.
Pinchpoint understands that SCOR has not, as of now, approved the proposal to open it up. Without it, though, credit agencies will only be able to continue to offer today’s postcode and survey-based analysis, which we all know from the litany of fines, doesn’t meet even current UKGC expectations - let alone what’s likely to happen in the white paper.
SCOR has our sympathy. It’s a difficult decision. Not only would the organisation’s central purpose change – gambling spend is not debt collection – but also the founding principle of reciprocity would be compromised since gambling data is not likely to be fed back into the pool. Or is it?
The whole proposal also raises important privacy questions which might put at risk consumer and business confidence in credit scoring in general.
SCOR people we have to spoken worry about ensuring that consumers who gamble cannot be denied credit by lenders who see it on their file, and wrestle with the fact that all the data currently in the pool was not collected for the purpose of managing gambling.
They also worry about what will happen to the soft credit checks which will happen each time a gambling operator checks their customer’s file. What’s the risk of these checks being taken into account by lenders, and effectively leading to discrimination against people who gamble when accessing credit. The agencies say this won’t happen, but consumers will want to rely on more than just their word.
Hazard a guess
The bigger question though is, does the SCOR data even help solve for problem gambling and affordability?
After all, it doesn’t include anything about current income or savings. It assumes it, but doesn’t know. It is incomplete (with some lenders missing) and retrospective.
It’s also perfectly possible that someone can have a gambling problem and be good at revolving their credit card debts, getting a good result from a SCOR-based analysis.
It’s equally possible that you could have a late payment on your record because your salary was late one month, or you have recently moved, all of which tend to reduce your credit score and suggest vulnerability - but have nothing in principle to do with risk of gambling harm.
So we are back to the world of prediction and estimation. Credit agencies employ many smart people who are working hard to create products that have higher degrees of confidence, but, as recent UKGC fines have shown, estimates are not always considered good enough.
The truth is there is a straight trade-off between facts and friction. The less friction you want, you fewer facts you get with these tools.
With the White Paper likely to be more prescriptive rather than less, it seems the risk here is of overreliance on this one source – if the credit agencies are even allowed to offer it.
Getting personal
Meanwhile, we notice a press release from the European Gaming and Betting Association on the subject of responsible gambling messaging and checks.
Referring to its Sustainability Report for this year, EGBA notes its members “have stepped up their efforts to promote safer gambling”, sending 22.5 million personalised and targeted safer gambling communications to their customers in 2021.
As EGBA’s press release points out, this represents a 700% increase on 2021.
Get the message
What we find interesting specifically is the finding that the number of customers using at least one safer gambling tool, either mandatorily or voluntarily, increased to 14.9 million, or 50% of customers.
It seems to us that this is instructive. Much of the debate on affordability measures among those working in and around the gambling industry is about how any such checks will somehow be so obtrusive as to put consumers off gambling or force them to the black market.
This goes against the evidence from EGBA. Consumers are clearly quite willing to jump some hurdles in return for accessing a safer gambling environment. Who knows, they may even see a benefit.
About
The newsletter is published independently under the editorial supervision of Scott Longley of Clear Concise Media. Pinchpoint is not affiliated with any other publications. Pinchpoint is funded by Department of Trust and BetBudget.
We hope you find it useful and, as ever with these things, if you think any of your colleagues would be interested, then please feel free to share.
Contact
Scott Longley, scott@clearconcisemedia.com