Industry predictions 2023: Affordability stays a hot topic and the rise of the machines

Nick Arron, lead partner in the gambling team at Poppleston Allen

Affordability will continue to be a hot topic 

It is likely that the government and/or the Gambling Commission (UKGC) will introduce new requirements for licensees to conduct additional checks as to a customer’s ability to afford their gambling. There have been mixed messages about whether or not affordability checks are likely to feature in the white paper. We have heard that the government is having difficulty grappling with it, probably because of the impact on our freedom to spend our money on whatever we want to spend our money on. There are few other sectors of the leisure and hospitality industry where the government controls what you spend.  

Instead of grappling with it, it might be more convenient for the government to ask the UKGC to do something about it, so even if it isn’t in the white paper, the UKGC may well introduce more detail around affordability checks. It’s within the gift of the UKGC to introduce conditions or codes that place this type of obligation on operators. Indeed, it has carried out two consultations on affordability, though to date it hasn’t published the results of these.  

Remote operators will be forced to share data  

Linked to the affordability issue, I also believe either the UKGC or the government will bring in a requirement for online operators to share data on customers so that they can effectively have a better view of an individual customer’s gambling across multiple accounts with multiple operators. This could be via the single customer view that the UKGC and Information Commissioner’s Office have been working on, or via some other mechanism, but either way I think it will happen. The big question is when, because there are a number of technical and practical challenges when it comes to the sharing of data.  

This will be negative for operators because first, it will reduce the overall customer base. And second, it could mean all operators will have to offer protections at the most risk-averse level. For example, if there is an operator with a very low risk threshold and it shares information about a problem gambler because it labels them as such, it then could make it more difficult for other operators to justify engaging with that customer, even though they may not meet their own criteria to be classed as a problem gambler.  

We are going to see an ombudsman scheme 

Ombudsman schemes are a current favourite of our government and we see them in various sectors. One of the themes of the UKGC over the last 10 years has been operators putting customers at the heart of their operations, but that isn’t necessarily in line with the licensing objectives of the Gambling Act 2005. We have seen a lot from the UKGC in recent years about consumer redress and the protection of customers. This was really initiated by Sarah Harrison, who joined as CEO from Ofcom, and it carried on under Neil McArthur’s leadership. But it is not the role of the UKGC to adjudicate between players and operators under the Gambling Act 2005 and a separate body is needed to do that.   

An ombudsman could well be formed from one of the existing alternative dispute resolution (ADR) services such as the Independent Betting Adjudication Service and it has already publicly announced its interest.  

Once an ombudsman comes into force, I think they will be absolutely inundated with complaints to begin with. Although players can use ADRs now, there will be more public awareness once an ombudsman is in play and there will be much more media coverage of it than there has been of independent arbitration so far. People don’t necessarily know what an independent arbitrator does but are generally more aware of the role of an ombudsman from other sectors. 

Maria Cobos, head of compliance, USAbility 

Significant AI advances to facilitate and improve compliance-related processes  

There has never been a time when operators, regulators and technology providers to the online gaming industry have collected more real-time data about players’ activity in the past than they do right now. With the help of this data collection process, all parties will be able to join forces to modify player behaviours so that harm can be reduced.

By utilising the latest advances in artificial intelligence (AI), operators will be able to provide personalised, immediate interaction with players in potential risk situations in order to address, mitigate and minimise gambling-related problems. In their attempt to forge documents, fraudsters make use of technological advances as well.

Operators can limit this risk by applying the latest technology on biometric ID and real time NFC (near field communication). Currently, most countries issue identity documents that are chip-based, containing all consumer information. Mobile phones with NFC capabilities can be used to retrieve information from identity documents. Thus, financial crimes will be reduced as only those with true identities will be onboarded. Managing KYC must become a continuous process, not only during the onboarding but also through monitoring customers on a long-term basis. 

Greater focus on AI to drive increased customer personalisation  

As the macroeconomic climate continues to impact the ability of operators to invest in viable acquisition strategies, the exploration of solutions that enable operators to better understand their existing customers is a key initiative in aiming to combat the aforementioned challenges. The topic of personalisation has been a constant presence on operator roadmaps for a number of years, however implementing a solution that delivers the required outcomes has always been challenging from both a technical and financial perspective.  

Advancements in AI and machine learning-based solutions, coupled with a greater focus on the use of data has increased possibilities that operators have in respect to implementing a truly personalised customer-led solution. Previously, operators had access to the required data and had a vision for how this could be leveraged to drive personalised content, however the technical algorithms that needed to be built to achieve this goal were complex and required significant investment.

With the advancement of AI and machine learning solutions, the necessity to build a solution from scratch has been reduced whereby new technologies can be leveraged to achieve the required outcomes. The ability for operators to provide customers with personalised content, betting opportunities and promotions will aim to reduce churn, drive more frequent customer interactions and increase revenues. The big question that remains is do operators focus on building these solutions themselves or outsourcing to suppliers with a proven track record. 

Focus on costs and improved GGR 

US sportsbooks will shift strategies away from increasing market share to cost cutting and a focus on improving GGR by other means. The cost of acquisition in North America is too high, regulatory and business costs are biting while revenues are not what operators had hoped for when the sports betting gold rush started in the US. This, combined with dwindling number of potential first-time account holders, means the US betting industry is likely to shift its focus to managing costs and improving trading margins in order to satisfy shareholders.

We are likely to see more pressure on suppliers to reduce the cost while marketing costs will also come under scrutiny. The larger operators are likely to concentrate on in-house technical solutions in order to keep feed costs down and offer a greater degree uniqueness and market differentiation. There will also be increased focus on improved trading tools and algorithms as well as revised trading strategies in order to improve betting margins that still lags their European counterparts.