All about the "AFFORDABILITY CHECKS" that could drive thousands of online players in the UK to the black market

As we explained when discussing the WHITE PAPER of April 27, 2023, the UK Government took almost three years to review and modernize the Gambling Act of 2005 and the regulations concerning data protection, advertising, and financial issues for operators that make up the legislation of the regulated gambling market in the country.

One of the proposals by the Executive in this provisional document was that online operating companies should establish two new control protocols to ensure that their customers are incurring losses that are bearable to their financial situation. These protocols quickly became known as AFFORDABILITY CHECKS, which we would translate into Spanish as "CONTROLES DE ASEQUIBILIDAD," although it seems more descriptive to consider them as ECONOMIC CAPABILITY VERIFICATIONS.

After a consultation period, this proposal received the green light and was preparing for implementation throughout 2024. However, the UK Parliament will debate these controversial affordability checks in a dedicated session on February 26th, following a petition supported by 100,000 signatures requesting to halt their execution.

WHAT AFFORDABILITY CHECKS ARE ABOUT?

Affordability checks are divided into two distinct protocols, one much more acceptable to players and operators, and the other more intrusive, controversial, and undoubtedly going to generate unwanted consequences.

The first form of control is defined as "passive" and focuses only on those players who spend more than £125 (losses) in a month. This verification has been included in numerous regulated gaming markets and, in any case, is already carried out by most operators for similar amounts by their own decision.

A second security protocol translates into more detailed measures similar to the credit checks carried out by telephone companies or large stores to issue loyalty cards or allow installment purchases. In this case, it would be applied to those players who spend more than 1,000 pounds, and this is where the controversy arises.

Below we describe them in detail according to the information published by the Gambling Commission after its confirmation following the relevant public consultations.

LEVEL 1 OF CONTROL

• The first level would test financial vulnerability, "non-intrusive" controls.
• The net loss of the customer who would go through the protocol would be £125 within a joint period of 30 days, or £500 within a period of 365 days. These are figures typical of a recreational player in any case.
• It is estimated that this would reach around 20 percent of customer accounts in British operators.
• The controls would use "publicly available data" and look for financial problems such as bankruptcy orders or a history of unpaid debts.
• Such controls would not need to be repeated within a 12-month period.

LEVEL 2 CONTROL

• The second level would assess the financial risk of the player using credit reference data.
• It would be activated by losses exceeding £1000 within a rolling 24-hour period or £2000 in 90 days.
• It would include priority assessments and prioritize processing information from players between 18 and 24 years old.
• In many cases, operators would need to ask customers for data through their online banking service or request to send documentation when a credit reference agency cannot provide sufficient information.
• At this level, controls could take place up to twice a year.

Both levels of affordability checks will be discussed as one in the parliamentary session on February 26th.

POTENTIAL IMPACT AND OBJECTIVES

If the second protocol of these controls is implemented, it would affect approximately 3% of customers. However, it is known that these customers account for around 50% of the deposit volumes for most operators. Although this percentage has significantly reduced in recent years, it does not reflect the reality in products like poker and sports betting, where most operators advocate for a higher "lifetime value," even at the expense of reduced activity or average betting.

If realized, operators will face numerous responsibilities to carry out these affordability checks. They will need to take appropriate measures based on the results, which may include applying limits to an account or, in severe cases, completely terminating the relationship with the customer. This is something that is already being done in Spain, following the latest player protection measures.

However, minimizing aspects such as privacy or data protection does not seem to be the best positioning for the Regulator, considering the success in improving regulated markets in terms of protecting individuals from financial harm and preventing excessive losses.

PETITION FOR NON-IMPLEMENTATION AND PARLIAMENTARY DEBATE

The Betting and Gaming Council of Great Britain (BGC) has urged the government to fulfill its commitments regarding financial risk controls, taking into account the demands of operators, based on experiences like that of the German market. This follows the announcement of a parliamentary debate on the matter.

The UK Parliament will debate controversial affordability checks on February 26th after a petition calling for a halt to their implementation reached 100,000 signatures. Initiated on November 1st by an individual associated with the horse racing sector, the petition argued that the proposed controls would be "inappropriate and discriminatory". The document, established by the CEO of the Jockey Club, Nevin Truesdale, received an initial negative response from the government after reaching 10,000 signatures.


The widespread opposition to this control is not limited to the industry; the betting and poker player community has also been critical, as the controls would lead to intrusive requests for personal and financial documents, potentially deterring bettors from participating in a regulated market.

With 100,000 signatures, an important parliamentary debate on the issue is now secured, welcomed by all sub-sectors, especially by the CEO of the British Horseracing Authority (BHA), Julie Harrington, acknowledging that it endangers the country's racing activity.

At the parliamentary level, there have already been statements against the AFFORDABILITY CHECKS from both Labour and Conservative politicians.

In any case, in the coming weeks, MPs are expected to have the opportunity to inform themselves about this issue, so the media and associations are already putting the debate in the public eye with the clear argument of agreeing with the underlying issue but not with the execution: while the need to protect people from the risk of gambling-related harm is shared, it is illogical to implement such processes that infringe upon freedom and privacy for millions of people who enjoy betting without suffering any harmful effects.

CONCLUSION

After explaining the financial control proposals to be implemented in the UK, especially those involving requesting credit information from players, we have seen how this not only could infringe upon regulations and fundamental rights related to privacy but also that the UK Government must ensure that any measure in this field is sensible and proportionate.

It is hoped that the British Parliament, in the debate session scheduled for February 26th, will objectively analyze and anticipate the possible adverse consequences that a measure like the imposition of generalized affordability checks (including recreational players) could generate. Obviously, the most significant consequence would be fostering the growth of the unregulated black market, to which thousands of players might turn if principles such as privacy are violated through the collection of personal financial data.