Missing in action
EY fails the affordability test and Simo Dragicevic’s compliance overview.
Welcome to the latest edition of Pinchpoint, your go-to source for news and practical insights into affordability and financially responsible gambling.
The White Paper, aka the government’s manifesto commitment to a Gambling Review, remains in the ministerial in-tray and is now not expected to be published until January.
This month, though, has seen some significant interventions against the backdrop of the ongoing cost-of-living crisis and a series of poor trading statements by UK-listed gambling operators. We’re here to walk you through it.
EY’s missed opportunity
EY was commissioned again by the Betting and Gaming Council trade body to update its annual Economic Contribution Report for 2022.
These reports have always set a high standard for their analysis of the wider economic benefits of the UK gambling industry, including the jobs and taxes generated. EY takes its job seriously and hence its conclusions are worth paying attention to.
Sadly, EY’s 2022 report misses a golden opportunity to put some actual numbers on the impact of affordability checks on operators.
Despite the headlines, the report itself mentions affordability checks only in passing, and makes no attempt to measure their impact as part of the overall picture. All it actually says is that “online GGY has declined since mid-2021, probably reflecting the re-opening of physical venues, the introduction of affordability checks online, and the decline in real household incomes”. This is like a weather forecast without the temperature.
Measuring the impact of affordability checks is precisely what the Gambling Commission will need to do when it comes to turning policy ambitions into practical rules. EY are in the best position to gather this data. Let’s hope they get the chance.
EY and the BGC may not have tried to quantify the impact but someone else started to - the gambler’s journal of record, the Racing Post.
Nailed to the post
The Racing Post just published a lavish three-parter by the excellent Bill Barber which gives a voice to the gambling customer’s actual experiences of affordability checks with first-hand quotes.
It’s a self-selecting sample but the themes are consistent and the comments would not surprise anyone who has worked in a safer gambling role in the past few years.
The article hears from loyal customers being put on seemingly arbitrary limits which vary from site to site, even based on the same disclosed income and spend. Comments such as ‘I wouldn’t give my brother my bank statements’ and decisions made by ‘faceless’ agents are frequent.
It’s impossible to read the RP series without concluding that the way the industry conducts affordability checks and the lack of consistency in their application isn’t working for anyone.
Only clear regulation can solve that and that can only come from the White Paper. Speaking to senior figures in the industry after the EY report, we have begun to detect a concern now not that the policy won’t be announced, but that when it does they will have no more clarity than today. After all, why the delay unless something is being changed?
The compliance landscape
Simo Dragicevic is a well-known figure in the UK gambling sector. He founded BetBuddy, a pioneer in using wagering behaviour to automatically identify risks of gambling harm, and since May of this year has been a member of the digital advisory panel for the UK Gambling Commission.
That’s one reason why we were intrigued by a posting Mr. Dragicevic posted on LinkedIn earlier this week. The other reason was that it’s about the best treatment of the subject of gambling regtech we have seen in a long time.
As a whole, the piece is worth a read but Pinchpoint was particularly interested in what he had to say about affordability. Having identified that many previously ALM and KYC-focused providers are now eyeing affordability as an area which they might be able to move into, he adds that the providers are at present relying on a variety of data sets which (as we detailed in past issues) each have gaps that lead to the kind of problems described by the Racing Post.
The pot-pourri of information being relied upon includes geo-affordability data, Credit Account Information Sharing (CAIS) data, such as monthly credit data relating to credit card expenditure, loans, mortgages, etc, and Current Account Turnover (CATO) data that provides opportunities to understand a customer's discretionary spend.
“The emergence of Open Banking is creating opportunities to access customer data directly from their bank accounts,” he adds.
Ultimately, where Open Banking wins in our view is it provides customers with control and gives operators complete explainability. There is no conjecture or predictions based on postcodes and estimates from credit card defaults; there is no risk of impacting credit scores; there is no need to download, redact and send all your bank statements as the RP punters complain about so bitterly.
Thank you for reading the Pinchpoint. The next few months look likely to be critical in the development of the gambling industry in the UK - and internationally, as other countries will certainly be watching what happens here. We’ll be here to help you navigate it all.
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