The £500 affordability question
The key takeaway from ICE, plus the UKGC issues new rules and the cost-of-living crisis deepens
Welcome to edition #2 of Pinchpoint. Thank you for subscribing.
ICE half felt like a return to “business as usual”. Pinchpoint enjoyed seeing many happy impromptu reunions as old friends collided in the carriageways, whilst absolutely no one knew where they were going, unable to triangulate directions against the usual landmarks of IGT, Playtech, Microgaming and Novomatic.
There was a “player protection zone” which was small but perfectly formed. Even before the UKGC dropped its new guidelines mid-week, many conversations there coalesced around the new consensus that the UK government is looking to set an affordability check threshold of £500, both of which we are going to dig into here for you.
The £500 Question
We heard it so many times it began to feel like a fact: the UK government is set to impose a £500 affordability limit on operators, and they may not need to change the law to do it: helpful given the pressures on the parliamentary timetable.
Absent a white paper or any clarification from the UKGC the industry remains in the dark as to what this actually means - not just how an operator determines that the limit has been reached, but what they are then supposed to do to determine “affordability” and evidence it to the commission when asked.
Having a number would in itself at least represent progress. Right now, it’s a game of pin the tail on the donkey. A number means every operator will be working to the same rule.
But without clear rules to accompany it, we find it hard to see how the industry will be able to go forward.
Change is gonna come
There are hints to the government’s thinking if you read between the lines.
In early March, the minister with responsibility for gambling Chris Phillip spoke at a Gambling Reform rally - itself a clue as to where the government is heading.
Notably, within his speech, Phillip cited the recent affordability failures, including the recent sanction against one operator for allowing an NHS worker earning £1,400 a month to set a deposit cap at £1,300 a month. “
“That’s over 90% of their monthly income,” Phillip added. “In addition to that, they allowed another customer to lose £37,000 in an extremely short period of time with no checks whatsoever.”
It seems to us from this that the government is signaling that, once the line has been drawn, they will not be willing to continue to tolerate operators relying on estimates or self-certification of income for anyone spending over the threshold. That’s huge.
As to when we can expect the changes to come into force, it is notable that as UK licensing expert David Clifton said in a recent article a change in primary legislation would likely not be needed.
He pointed to the recent UKGC business plan which suggested that changes proposed in the white paper might be affected through alterations to the Licensing Conditions and Codes of Practice.
What does £500 even mean?
Losses? Deposits? Over what period? Including money won from bonuses? What about money won from other sites? If there’s anything we’ve learned in this industry, there’s no such thing as a simple number.
We don’t envy those whose job it is to write the rules, but we do hope that the industry is consulted in enabling them to devise something workable. Banning bonuses (which has also been mooted) might make the maths easier but feels like the sledgehammer meeting the nut.
Pinchpoint viewpoint: The headlines will be the focus whenever the government finally gets around to publishing its white paper and the prospect of stake limits on slots and potential bans around some forms of gambling advertising are almost certain to be among the measures introduced. An affordability limit might also feature but what the sector will focus on is what is proposed in terms of how such measures are introduced, what they will entail and what operators will be expected to comply with from this point.
The UK Gambling Commission’s new customer interaction guidelines
Ahead of the white paper from the government, the UKGC announced on April 14 new rules for action on at-risk customers which will come into effect on September 12.
As the Commission said, the new instructions are “stronger and more prescriptive” than those that were previously applied. Among them were:
The use of a specific range of indicators, “at a minimum”, to identify harm.
The flagging of indicators of harm and the need to take action in a “timely manner”.
The implementation of automated processes for strong indicators of harm.
The prevention of marketing and take-up of bonuses by at-risk customers.
Evaluation of interactions “at the level of problem gambling for the relevant activity”.
The provision of evidence of customer interaction evaluation to the UKGC during routine casework.
Compliance needed for all third-party providers.
Further guidance will come in June, presumably timed to follow after the white paper. Hammering home points made vias the UKGC fines issued against 888 and BetVictor, Andrew Rhodes said:
“Time and time again our enforcement cases show that some operators are still not doing enough to prevent gambling harm. These new rules, developed following an extensive consultation, make our expectations even more explicit.”
The response
In a blog, Chris Elliot at Wiggin said the new LCCP requirements “will move away from requiring operators to ‘interact’ when customers exhibit potentially problematic behaviours, instead requiring operators to ‘act’.”
“The devil will be in the detail of what this will actually mean for operators and consumers, but the updated LCCP requirement is a clear move towards setting prescriptive, minimum standards in order to raise the standards of player protection controls across the online gambling industry.”
Chris Elliot, Wiggin
The pressures on UK household budgets
The news gets worse for UK households trying to hold it together during the worst cost-of-living crisis in a generation.
The latest stats from the UK’s government’s ONS survey for April show 87% of adults reporting an increase in the cost of living over the previous month. Nearly a quarter (23%) of adults reported that it was very difficult or difficult to pay their usual household bills in the last month. The most common reasons reported by adults for the increased cost of living in March were increases in the price of food shopping (88%), gas or electricity bills (83%) and fuel.
Recall, in the last Pinchpoint, we revealed the results of a survey undertaken on behalf of the Department of Trust that showed that the cost-of-living crisis was likely to have an effect on gambling spend.
That survey showed that 32% of respondents said they will spend less on gambling in the coming months while a further 18% say they will stop playing entirely and 59% said the reductions are directly due to pressure on their finances.
Pinchpoint viewpoint: The gambling industry needs to be aware: the news on the worsening crisis is only likely to increase those numbers.
What we’re reading
Rob Davies’ Jackpot: How Gambling Conquered Britain is a must-read for anyone in the sector. You may or may not agree with the book’s arguments, but David is a good writer and it is always a good exercise to see what is being said on the other side of the debate.
Dan Waugh at Regulus looks at the UK’s National Strategy to Reduce Gambling Harms in Great Britain.
“The Gambling Commission’s website describes a vast array of uncoordinated projects grouped together under thematic headings, presented in a fashion seemingly designed to inhibit comprehension. There is every indication of activity but it is difficult to see to what end such energy and resource have been expended.”
Stomach-churning: As inflation soars, how many price rises can Britons stomach? The Sunday Times, 10 April
And how low can you go? Bloomberg on the UK’s sinking consumer confidence.
About
Pinchpoint is a newsletter from by Department of Trust and BetBudget.
The newsletter is published independently under the editorial supervision of Scott Longley of Clear Concise Media. Pinchpoint is not affiliated with any other publications.
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
Charles Cohen, DoTrust: charles@dotrust.co.uk