Industry reaction to the Gambling Commission’s affordability checks plans

The headline news this week was the Gambling Commission (GC) providing some much-needed clarity around the future of UK regulation after more than a year since the publication of the white paper into the Gambling Act 2005 review last April.

That clarity manifested as the regulator explained plans for financial risk assessments, after the closure of the consultation window back in October.

Having pored over the feedback, “light touch” checks will begin with a £500 net deposit limit from August before shrinking to a £125 threshold in February 2025.

However, thresholds at the upper-range have not been confirmed, with a six-month pilot scheme set to be deployed to further inform the GC’s plans for frictionless risk assessments for the “vast majority of customers”.

The checks could be informed by the Betting and Gaming Council’s (BCG) new voluntary code, with net deposits of £5,000 a month initiating a risk assessment, while a higher £25,000 threshold in a rolling 12-month period will see operators undertake a thorough assessment, including enhanced due diligence.

Aside from the headline grabber, the GC also confirmed changes around online casino games, personal management licences and land-based operations, as well as significant alterations to marketing processes.

Earlier this week, EGR recapped a media briefing hosted by Andrew Rhodes and Tim Miller, with the duo touching on topics including black-market leakage and how the pilot scheme will work. Here, we caught up with a host of experts to garner their thoughts on the GC’s plans.

Kirsty Caldwell, Betsmart Consulting founder and director

“It was great to get a positive, tangible update from the Gambling Commission this week. Operators have been stuck in limbo for quite some time now, worried to make changes to their processes, but equally concerned that they could fall foul of regulatory expectations during compliance assessments.

“With the financial risk check pilot now likely to run until end of March 2025, the GC’s public backing of the BGC voluntary code is helpful. It provides operators with the basis of a framework to consider aligning with, and it goes some way towards levelling the playing field.

“That said, the code itself is high level and brief; and at £5,000 a month and £25,000 a year, the thresholds are much higher than those which most operators currently have in place. In order to ensure compliance with the LCCP, particularly around elements such as preventing binge gambling, operators will need to do a lot of careful thinking around how they can safely implement these new limits within their existing safer gambling frameworks.”

Melanie Ellis, Northridge Law partner                

“The challenge with the proposed financial risk checks has always been what operators are expected to do with the results of a check. When it comes to the ‘light touch’ checks, in practice this will mean the operator deciding what to do with information that a customer is subject to a CCJ, IVA etc. 

“The new LCCP provision only states that they consider this information, together with other information they know about the customer (and are permitted to use under data protection laws) and take ‘proportionate action’. Operators must now consider what action would be proportionate in different circumstances, which may include making further enquiries of the customer and their circumstances or deciding to refuse service.

“The question of what further gambling should be allowed by a customer who passes a light-touch check, pending the introduction of enhanced assessments following the pilot phase, has been addressed by the BGC’s new Code of Conduct. 

“However, I would be cautious about treating this as carte blanche to allow such customers to gamble up to £5,000 per month without further checks or interactions – it is very likely the GC will continue to take action against operators who allow gambling that is clearly unaffordable, particularly where the operator already holds information about the customer’s likely disposable income and/or there are other indicators of harm such as significant time spent gambling.

“Also notable are the GC’s amended proposals for direct marketing, which will come into effect on 17 January 2025. A pragmatic decision by the GC has been to change the point at which customers must make their selection of which products and channels they wish to opt-in to for direct marketing. 

“Under the initial proposal, customers would need to have made that choice before receiving any marketing materials after the provision came into effect, whereas the revised proposal permits the operator to continue marketing to the customer until such time as they login, at which point they must make their selections before gambling. 

“While the default option for each product and channel must be ‘opt-out’, there is no specific prohibition on offering an ‘opt-in to all’ option. The list of channel options has been reduced, with push notifications, social media direct messages and posts no longer covered by the requirements. It is also notable that this provision will not apply to lottery operators, who were included in the initial consultation proposal.

 Richard Williams, gambling partner at Keystone Law

“Looking back at the white paper published a year ago, it’s clear that the government has listened to consultation responses on financial vulnerability checks and financial risk assessments.

“In relation to enhanced financial risk assessments for the highest spending online customers, these are now to be subject to a pilot study from August 2024, which will involve the largest gambling operators. This pilot will not be undertaken in a live environment and the Commission will then explore appropriate financial thresholds at which these checks must be undertaken. The gambling industry will be pleased to hear that enhanced checks will now be tested for effectiveness and impact before they are rolled out in practice. It’s possible that if the checks cannot be made ‘frictionless’ this will not happen at all.     

“It should be noted that (a) light-touch vulnerability checks will now be implemented in stages, to allow operators to adapt to the new rules, (b) annual thresholds for checks have been scrapped as the Commission believes that 30-day limits are sufficient; and (c) there has been no mention of lower thresholds for those aged 18-24, who were originally to have 50% lower limits.

“These revised proposals appear to strike a good balance between protecting consumers and not tying operators up in knots. It’s also good to see an indication from the Commission that operators must consider the results of financial checks and take appropriate action, rather than just closing accounts down where any risk is flagged. This is all common sense. Some critics of the gambling industry will complain that the original proposals have been watered down, but this appears to be a sensible way forward.”

The team at Harris Hagan

“The stance taken by the Gambling Commission in relation to light-touch financial vulnerability checks and financial risk assessments is fortunately a far cry from what the industry feared when the summer 2023 consultation was first published. The Gambling Commission should thus be credited for genuinely listening to all responses to the summer 2023 consultation and adopting a sensible pragmatic approach.

“Regarding the light-touch financial vulnerability checks, the Gambling Commission has helpfully reduced the range of flags to be taken into consideration and clarified that it does not consider all flags should result in one type of action – giving the example that a county court judgment for a parking ticket should not be treated the same as a bankruptcy. It will be up to licensees to tailor actions to the nature and severity of all indicators of harm for a particular customer.

“Regarding the pilot for enhanced financial risk assessments, this is an undoubtedly a wise step by the regulator. Without a pilot, there was a significant risk of unintended consequences of the new rules, which may have been irreversibly detrimental for the industry. It is further positive that, in introducing the pilot in the summer 2023 consultation response, the Gambling Commission has reiterated that the financial risk assessments should be frictionless for ‘the vast majority of customers who undergo them’; apply to ‘only the highest spending remote gambling accounts’; and ‘would not be a cap on gambling’.

“If the Gambling Commission can stay true to these aims, this is good for the remote industry, which has long expressed concern that such checks would encourage gamblers to move to the unregulated black market. One critical aspect of the journey ahead will be interpreting what is meant by ‘vast majority’ in the context of the frictionless nature of enhanced financial risk checks – as we expect the Gambling Commission and the industry may have different views.”