Welcome to the Pinchpoint
In this issue: a look at recent Gambling Commission sanctions and Charles Cohen discusses the issue of gambling and the cost of living crisis.
Welcome to The Pinchpoint from Department of Trust (DoTrust), the first of what will be a fortnightly newsletter to discuss and examine the many and growing issues around affordability and gambling.
Affordability is an ethical, technical, regulatory and operational challenge for the whole of the gambling industry. It has been at the forefront of discussions around the UK’s Gambling Act review for some time, a period punctuated by ever-larger fines and sanctions imposed on operators by the UK Gambling Commission. Both the industry and its customers are in a ‘pinch point’, and the pressure is building.
Why Pinchpoint?
Affordability is only one part of the responsibility challenge, which touches on everything from game design to marketing, but without a proper understanding of the ongoing affordability of each player’s wagering we will never be able to connect the dots and create a full picture.
The starting point must be a shared understanding of what “Affordability” actually is in the context of gambling. A core mission of The Pinchpoint is to stimulate a conversation amongst operators, advisors, regulators and experts that can lead to an accepted definition appropriate for this industry.
To support this, our fortnightly newsletter will look at the latest developments in the space, review new initiatives by gaming companies and new offerings from vendors, and highlight best practices and new ideas.
We encourage you to join in through our feedback and comments, and to make contributions as a guest writer. Please email scott@clearconsisemedia.com if you are interested.
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.
In this fortnight’s issue:
A DoTrust survey shows how the cost-of-living crisis will affect the UK gambling industry.
A look at the recent news from the Gambling Commission where fines this year are already reaching the total from 2021.
DoTrust CEO Charles Cohen: gambling and the cost-of-living crisis.
Cost-of-living crisis survey
A poll undertaken on our behalf by YouGov shows that half of all active gamblers in the UK are expecting to either stop gambling altogether or reduce their spend due to the pressure on their finances from the rising cost of living.
The poll was conducted in mid-March 2022 amongst a representative sample of current, active gamblers.
32% of respondents said they will spend less on gambling in the coming months while a further 18% say they will stop playing entirely.
59% said the reductions are directly due to pressure on their finances.
11% of respondents said they were already struggling to meet even essential bills and expenses.
43% said they were consciously cutting back on non-essentials while 38% said they were watching what they spend without, as yet, making any changes.
Charles Cohen: “The finds should be seen as an alarm bell. Inflation is at levels not seen for decades and this is translating into a fast-moving affordability crisis for the gambling industry. Wait-and-see is not an option: operators need real-time financial data more than ever.”
YouGov conducted the survey of 700 current and recent UK gamblers (excluding Lottery only players) on behalf of the Department of Trust in the week to 17 March.
UKGC fines already close to total for the whole of 2021
On the back of some significant fines of major players, 2022 looks like it might break records for the penalties imposed by the Gambling Commission on UK operators for failures relating to affordability, responsible gambling and AML.
The Commission release relating to the latest blockbuster fine, this time on 888 for issues dating back two or more years, brings home just how complex and difficult compliance can be.
It also confirms the level of scrutiny operators can expect into day-to-day activities going forward.
Some examples from the Gambling Commission press release on 888’s failings:
Not effectively identifying players at risk of harm because their policies determined financial checks should be carried out after a customer had deposited £40,000.
Not carrying out a customer interaction with a customer who lost £37,000 in a six-week period during the Covid-19 pandemic.
Giving a customer they knew was an NHS worker earning £1,400 a month a monthly deposit cap of £1,300.
Yet, as Melanie Ellis, partner at Northridge, points out, for all the detail of the charges laid at 888’s door, what they don’t say is what the thresholds should be in each case. “The GC has always been wary of setting out detailed requirements on the basis that it would lead to a ‘race to the bottom’, but the current approach leaves operators engaged in a guessing game.”
Ellis adds that there is a “fair amount of variation between operators as to how they have interpreted the Commission’s expectations on affordability checks”.
“There are some areas in which some confusion is understandable, as the Commission itself has not been clear – an example is the mixed messaging as to whether it is deposits or losses that should trigger checks and form the basis of restrictions when it comes to affordability.”
As Dan Waugh, partner at gambling consultancy Regulus, readily admits, the confusion over affordability is widespread.
“I don’t understand what affordability means. Is it about prevention of genuine financial harm (i.e. gambling to levels that are unsustainable and that lead to indebtedness or health harms) or value judgements about how much of a consumer’s own money he or she should be permitted to allocate to gambling? To some it means the former; to others the latter - and this creates confusion and muddled thinking.”
Government direction needed
In part, this confusion has been caused by a lack of direction from the top and certainly, there has, as yet, been too little in terms of specifics from either the government or the regulator.
“The Government is the right body to weigh up this risk, determine where the right balance is to be struck and impose any necessary measures to counter the risk,” says Ellis.
But Waugh also suggests that the consumer should be empowered and supported in making “healthy decisions for themselves and reserving interventions for situations where customers are experiencing control issues”.
DoTrust note: Please check out our free BetBudget app, designed to help consumers keep control of their betting and gaming spending habits.
Waugh adds that many of the RG initiatives seen in recent years have been from the perspective of either the operators or the regulator rather than the customer He points to limit-setting.
“Encouraging customers to set limits on the basis of harm prevention may have limited salience because first, a majority never experience financial problems with gambling and second, those who do experience financial problems do so unintentionally.
“If widespread adoption and effectiveness of 'safer gambling' initiatives is the ambition we should be taking the time to understand how measures can have positive utility - as distinct from simply saving people from themselves - and designing them around customer needs.”
Waugh also notes that in order for feedback from the regulator to the licensees to be helpful, it needs to be specific, targeted and actionable.
“Commission statements can be frustratingly opaque - omitting important detail and failing to provide context which may indicate whether failings are accidental or systemic - the exception or the rule.”
His call is that the Commission should be more transparent, more detailed and more balanced in its communications. It is a sentiment that many others within the sector will share.
Pinchpoint post
By Charles Cohen, CEO and founder at DoTrust
The Price Of Pasta: How does the price of a bag of dried pasta relate to the prices quoted on tonight’s Premier League slate?
This might look like one of those ‘butterfly effect’ questions, but inflation has real-world consequences for gambling operators and their customers that are dangerous to ignore.
“Price hikes, particularly the kind of unpredictable and sharp increases we are seeing today in basic foodstuffs and energy, obviously erode many people’s disposable income - the money they use for gambling.”
Players are likely to be spending less on gambling as a result because they have less to start with. They will intensify the hunt for value, too: be that in product mix, wager type or rewards.
So pasta prices go up; there is less money to spend; operators work harder to attract bets - margins narrow. Butterfly, wings, storm.
There is, however, something else going on here which the industry could have a real impact in: general financial literacy.
Understanding how money works and being self-aware enough to manage your personal budget is a prerequisite for a good financial life - as well as responsible and affordable gambling. It’s the reason why every intervention script wants to know, “Do you ever lose track of how much you are spending on gambling”.
Operators are encouraged (by the Gambling Commission among others) to see their safeguarding role as being limited to what a person can afford to spend on gambling.
This may have been adequate in benign economic times, but it isn’t now. If gambling spend is not seen in the context of how well in general a person manages their money, even the best-targeted interventions are liable to fail.
This awful period of rising prices and economic disruption should help us to realise that gambling is just one part of the puzzle, and the better educated and empowered customers are those most capable of making the right calls for them when it comes to betting and gaming - and everything else.
I just checked a dozen or so gambling sites and didn’t find a single one offering links to general financial wellbeing tools or counseling services. It’s as if the rest of the player’s financial life doesn’t exist, just their gambling. That’s not sustainable.
Six months from now, will you be part of the change?
In the papers
The Sunday Times, 20 Mar: The Chancellor intervenes in the Gambling Act Review over fears of the impact of across-the-board affordability measures.
The FT, 19 Mar: Meanwhile, Sunak is also under pressure to help the working poor with the cost-of-living crisis.
Contact:
Charles Cohen, DoTrust: charles@dotrust.co.uk