The price is right: the question of affordability in the UK

In British gameshow institution The Price is Right, Bruce Forsyth asked contestants to go higher or lower in picking their next card for a chance of winning a big prize. In some ways, the UK gambling industry has also got to pick its next card, going higher or lower, but this time in respect to affordability. We’ve spent the last 18 months dancing around the issue, as report after report has recommended caps, limits and affordability checks, but it looks as though the government is aiming to settle the debate as part of the review.

There was an actual admission that deposit limits based on affordability was absent from the main DCMS release concerning the review, however a deep dive into the terms of the reference document included with the department’s call for evidence as part of the review yielded two obvious hints at DCMS’ thinking. Two questions were particularly of interest, with one concerning the evidence for or against imposing deposit, loss and spend limits, while the other asked for evidence on whether limits should be universal or targeted in nature, based on affordability.

So, where’s the evidence going to come from? The most obvious candidate would be the Gambling Commission (UKGC), which has collected data on the industry over a period of many years, however the UKGC’s data vault doesn’t include specific research on the amounts staked, just high-level participatory information and stats. The UKGC has attempted to address concerns about affordability in its forthcoming LCCP changes, but it doesn’t have the databank to answer DCMS’ questions.

The natural follow-up candidate would be the treatment organisations, such as the GambleAwares and GamCares of this world, which have dealt with the sharp end of problem gambling by treating the gamblers who these sorts of limits could benefit. However, there is the inherent issue that they only have the data after the fact and there is no data present for the vast normality of gambling, i.e. the players who gamble within acceptable levels.

We’ve ruled out the regulator and the treatment organisations, so who’s left? The argument could be made that the best candidates to provide data on affordability are the operators themselves because they have the most up-to-date, real-time data on player spend. However, this opens the industry up to character assassination, and claims of manipulated data. In addition, customer data is by virtue sensitive in nature and the sharing of data could present issues in terms of compromising GDPR and resulting in commercial issues.

Open to interpretation

Indeed, not all operators might have the same view of what an affordability limit is, as former Sky Betting & Gaming CEO Richard Flint explains to EGR Intel. “I think the term ‘affordability limits’ has become somewhat unhelpful as it means different things to different people.

“In my mind, we shouldn’t be restricting people who seem to be in control and spending at modest levels relative to their likely income – even if some people might not think that level of spend on gambling is a good idea.

“However, as an industry, we should be looking after our customers by intervening to stop or at least pause those who are spending significantly more than they can afford, particularly if this is in a short period of time, or otherwise looks like it will be damaging for that person,” Flint concludes.

So herein lies the first problem for the government: getting the data to support the proposals. Without a clear train of data from recognised sources, it will inevitably be at the mercy of the smaller data sources, and potentially from the advocacy groups. In addition, the lack of extensive research specifically on affordability limits puts the whole endeavour under question, as we have seen in Sweden where operators have questioned the absence of a clear evidence-based rationale behind the introduction of their own deposit limits.

The second question presents a similar challenge for the UK government: whether those deposits, spend or loss limits should be universal or based on affordability. However, as with the first, research and work on these defined limits is hard to find, and even harder to peg down to a specific number. The only serious report which addresses the calculations required to generate such an arbitrary number is last year’s Social Market Foundation report, Gambling review and reform: towards a new regulatory framework.

Authored by Dr James Noyes, the report calls for a monthly £100 across-the-board affordability cap. However, as Noyes explained to EGR at the time, getting to that figure proved to be difficult. “Before going to the industry with this, I said to my colleague we need something which for the vast majority of people who gamble shouldn’t even come close to their experience of gambling because, at the end of the day, we’re not an organisation which believes in a nanny state,” he explained.

“We need to have something which, for the vast majority of people, wouldn’t even be an issue in their lives, so has to be high enough to be above that average spend, but it has to be low enough to protect the most vulnerable in our society,” Noyes added.

Striking the right balance

It is this problem the industry now faces: how do operators protect the most vulnerable but also allow those regular gamblers to continue and preserve the revenue chain? So, it comes down to the nub of the government’s question, should these be universal or targeted, like for example on affordability?

The UKGC, for its part, has gone down the road of affordability, which is a sensible starting point but has the effect of turning operators into glorified financial brokers, opening up a potential raft of claims from angry punters barred from gambling because they can’t provide a bank statement.

“The principle is admirable, but somebody needs to understand how this will be perceived by ordinary punters,” outgoing RAIG chairman Clive Hawkswood explains. “We are constantly told that there is no public confidence in the gambling industry, and yet here we are expecting them to hand over every detail of their financial lives.

“Be in no doubt that huge numbers will balk at such requests. It would be a terrible own goal for those in power if in seeking to solve one problem, they merely created a different one,” he added.
This is the tightrope that the industry and regulators have found themselves on, and as we’ve seen in Sweden, one misstep and you could easily find yourself inadvertently enabling the growth of the unlicensed market. Indeed, as recent evidence from former monopoly operator Svenska Spel shows, punters will waste no time in finding ways around these limits, in this case by merely increasing their spending with other operators or potentially with unlicensed firms.

Despite the precarious nature of the challenge, Flint suggests that time has run out for the industry to take action. “We have to recognise that, aside from the moral aspects, it’s not in our collective, long-term interest to have these stories of people losing vast, unsustainable amounts of money – or even worse being encouraged to do so by operators who have, or can get, the information to show it is unaffordable,” he explains.

“Of course, operators setting limits won’t solve problem gambling on its own, and customer set limits or customer self-exclusion are even more important,” he remarks.

As 2020 now turns into 2021, the consultation window for responses to the 2005 Gambling Act review is trundling towards a conclusion, and the challenge for government has never been more obvious. The aim is to deliver a system which gives practical results for problem gamblers while also preserving an industry which contributes a significant sum to the privy purse. With so much now resting on this, the response from both industry and advocacy groups could shape the future of the UK market for years to come. The price could be right, but the cost could also be high.