Affordability checks – good idea or disaster recipe?

The subject of affordability checks has sparked fierce debate between industry regulators and key stakeholders. 

As the UK gambling landscape continues to evolve and expand, concerns about potential financial risks and player wellbeing have taken centre stage. 

This article looks at the controversy surrounding affordability checks, shedding light on the varying perspectives, proposed measures and underlying statistics driving this discourse. 

Starting with the fundamental principles of affordability checks, we will provide an overview of this critical issue, enabling readers to grasp the complexities and implications of the proposed measures.

What are affordability checks?

Pretty much “what it says on the tin”. Affordability checks are assessments conducted by gambling operators to ensure their customers can afford to gamble. These checks aim to identify individuals who may be experiencing financial difficulties and are at risk of harm as a result of their gambling habits.

Affordability checks can involve reviewing a customer's income, spending patterns, and overall financial situation to gauge their ability to sustain gambling without financial hardship. These checks are part of increased regulatory efforts to promote responsible gambling and prevent harm associated with excessive gambling.

The underlying idea is to prevent individuals from gambling beyond their means and intervene when necessary to protect the vulnerable. The implementation of affordability checks underscores the growing emphasis on consumer protection within the gambling industry.

Startling data and stats 

As the online gambling industry continues to grow, concerns about the potential risks and harms associated with gambling have come to the fore. Some startling data and statistics underscore the need for better protections for gamblers, as many may be unaware of the risks they are taking. 

Here are more details of the proposed measures and the data that has prompted this action.

The Gambling Commission (UKGC) proposes implementing financial risk checks as a key measure to reduce harmful online gambling. One of the most commonly-cited stats by the UKGC is that "only 3% of gamblers would be subject to financial risk assessments via credit reference agencies or open banking data". This can be seen as a positive all round because the UKGC aims to only check higher risk people – explaining why the figure is relatively low.

Highlighting the need for greater protections, the Commission cited the Health Survey for England 2018, which reported that "3.7% of people betting online experience problem gambling, with an additional 5.2% at moderate risk of gambling harm".

These statistics underscore the UKGC’s concern that many gamblers may be unaware of the risks they are taking. A 2022 YouGov poll found that "59% of gamblers were not aware of the financial risks associated with gambling". Additionally, a 2023 study by the Responsible Gambling Trust found that "42% of gamblers had exceeded their budget in the past year". These findings highlight the need for better measures to protect consumers from gambling-related harm.

Gambling White Paper

And so we get to affordability checks as outlined in the Government’s Gambling White Paper, specifically: 

“Firstly, background checks at moderate levels of spend, to check for financial vulnerability indicators such as County Court Judgments. We propose these should take place at £125 net loss within a month or £500 within a year. Second, at higher levels of spend which may indicate harmful binge gambling or sustained unaffordable losses (we propose thresholds of £1,000 net loss within 24 hours or £2,000 within 90 days), there should be a more detailed consideration of a customer’s financial position. We also propose that the triggers for enhanced checks should be halved for those aged 18 to 24 given evidence on increased risk.”

Much needed or overreach? The Racing Post has been pretty clear on their position.

The Racing Post-UKGC spat

It’s probably fair to say that the Gambling Commission and the Racing Post haven’t seen eye-to-eye on affordability checks.

The Racing Post, understandably, is concerned about the potential impact such checks will have on the industry and have been fairly vocal about it.  David Carr in The Racing Post last November reported on the groundswell of opinion kickstarted by the Jockey Club’s petition:

"Inappropriate and discriminatory" was one view. "Catastrophic" another. 

Racing industry sources estimated potential lost revenue at around £250 million over a five-year period. It’s fair to say that no gambling activity or channel will go unaffected.  

The UKGC defended itself against criticism from the Racing Post, arguing that the Racing Post’s coverage of the issue has been misleading – going as far as to publish an open letter. The UKGC said that "only 3% of gamblers would be subject to financial checks". Usually, these checks would be done through credit reference agencies and open banking data. The UKGC also said that gamblers would not be required to provide bank statements or payslips. 

The UKGC also stated that "checks would not be shared with the broader financial sector". This is important, as some people have expressed concerns that the checks could be used to discriminate against gamblers. The UKGC has said that the checks would only be used to assess the affordability of gambling and not for any other purpose.

The Racing Post is "disappointed" with the UKGC's response, saying the checks will be “intrusive” and "damage" the online gambling industry. 

The Racing Post also said that the checks will not be effective in preventing gambling harm – the newspaper’s position being that the checks will only identify people already struggling with gambling addiction.

The UKGC said the checks will be "proportionate" and not "intrusive" and that checks will only be carried out on people who are at risk of gambling harm and that they will be designed to be as minimally intrusive as possible.

Affordability checks – pros and cons

Designed to ensure individuals aren’t gambling beyond their means, affordability checks are currently a hot debate topic. The proposals, as we have seen, have divided the industry. Here are some of the pros and cons of affordability checks for gambling:

Pros:

• Help identify individuals at risk of financial harm due to excessive gambling.
• Encourage responsible gambling behaviour by prompting individuals to consider their financial limits.
• It can be a valuable tool for gambling operators to fulfil their social responsibility by preventing harm to vulnerable players.

Cons:

• Implementation may involve an invasion of privacy, with individuals reluctant to share financial information.
• Difficulties in accurately assessing an individual's financial situation due to varying sources of income and economic complexities.
• Affordability checks could potentially drive individuals to unregulated gambling sites where such checks are not enforced.

Hardly a Ringing Endorsement 

The Racing Post aside, a sizeable proportion of UK online gamblers are uncomfortable with some of the proposed measures. A petition started by The Jockey Club in late 2023 received more than 100,000 signatures. A 12,000-respondent survey conducted by the Gambling Commission – and held under wraps for several months – revealed:

• 42% would refuse an operator’s requests for additional information about  affordability.
• 22.5% would stop gambling with any operator who contacted them requesting that information.
• Only 14% would comply and complete the extra assessments requested.

Invasion of privacy and unworkable?

One regular online gambler, Mr F from Weybridge in Surrey told No Wagering:

"The gambling sites don’t cross reference each other. You could have profits in one and losses in the other. It is very questionable whether any individual gambling site can form an opinion on your gambling expenditure and/or strategy without looking at all of your gambling accounts. The approach which they are adopting is far too simplistic. A possible consequence of this is that I will just stop gambling online and move to ‘cash only’ bets because it’s just too much hassle. I don’t want searches run on me by gambling organisations which I assume they will be doing."

Our take

It is evident that the debate around affordability checks for gambling is contentious, with both the Gambling Commission and the Racing Post presenting valid arguments. While the intention behind affordability checks is to protect vulnerable individuals from financial harm due to excessive gambling, there are concerns about the potential invasion of privacy and the effectiveness of the measures.

At the heart of this issue is balancing consumer protection and privacy rights. The proposed financial risk assessments help identify individuals at risk of gambling-related harm. However, addressing critics' concerns, such as these checks' potential intrusiveness, is essential.

One of the main points is finding a conclusion between the two main arguments. Perhaps a middle ground could be found where the checks are designed to be as minimally intrusive as possible, as the Gambling Commission has suggested. Additionally, there should be clear guidelines on how  information obtained through these checks will be used while also protecting individuals’ privacy.

Furthermore, there is a need for increased awareness about the financial risks associated with gambling. The statistics presented by the UKGC highlight the lack of awareness among gamblers about these risks. Therefore, alongside affordability checks, there should be robust education and support programs to help individuals make informed decisions about gambling.

Ultimately, any measures implemented must prioritise consumer protection and respect for privacy. A collaborative approach involving input from industry stakeholders, regulatory bodies, and consumer advocacy groups may be necessary to re-evaluate and refine the proposed affordability checks for gambling.