Igaming Focus: Will affordability conversations travel?

With affordability testing likely to be central to whatever the UK government finally proposes in its much-delayed and long-awaited White Paper, the sector is now wondering whether the idea will take hold in other jurisdictions.

What we know from the various leaks that we have seen so far of what will be contained within the UK government’s White Paper on gambling, some form of affordability measure is likely to be among the measures proposed.

Whatever the timing — and attempting to second-guess the publication date has become its own cottage industry — we can be reasonably sure about what the government will set out.

According to the details contained in the Earnings+More leak in mid-July, the government will lay out limits around losses of £125 within a month or £500 within a year, at which point “passive checks for signs of financial distress” will kick in.

This will involve automatic background checks “which customers will not even notice” to check for financial vulnerability indicators such as CCJs. The details will be hammered out via a Gambling Commission consultation this summer.

After that, higher levels of spending affordability checks kick in based on losses of £1,000 in 24 hours or £2,000 within 90 days.

This is where, according to the report, “there should be more detailed consideration of a customer’s financial position” with “largely frictionless for customers” and conducted online via credit reference agencies or via other means such as open banking.

No surprises

Charles Cohen, CEO at the Department of Trust, which provides affordability tests based on exactly this type of open banking access, suggests the idea of affordability tests is bound to migrate to other jurisdictions because of its centrality to any debate on responsible gambling.

“Whether you are talking about problem gambling, excessive play or even AML and underage wagering – all these roads lead eventually to the question of affordability.”

As Cohen says, all these seemingly distinct issues are effectively different angles on the same question: “Can this person afford to spend what they are spending on gambling and are they even aware there is an issue?”

Given this is the question being posed in every market, it is easy to see how affordability is all but guaranteed to crop up in other countries. But Cohen caveats that in attempting to find an answer, each and every gaming jurisdiction will take a different approach.

“Affordability In the UK will be done differently in the U.S., in Australia and different again in Europe,” he says. “But it has to be about things you can measure and about a real-world impact.”

Where the U.S. stands on affordability

Naturally, it is the prospect of questions around affordability tests being adopted by U.S. states that has garnered the most attention.

But Eamonn Toland, partner at the gaming consultancy Partis, points out that when it comes to responsible gambling issues, the regulators in the U.S. are in some ways ahead of their European counterparts.

“They have put responsible gaming measures in place ahead of Europe. From day one, every gaming state has a central problem gambling database and they also regulate appropriately in terms of KYC practices,” he says.

Meanwhile, some of the issues that have evolved in the European grey markets were “cut off from the beginning in the U.S. so while advertising was very intense, the measures were already in place”.

Cohen notes that how any jurisdiction deals with the questions of affordability will be determined by where it is starting from, both culturally and politically.

“They might start by hoping people can do it themselves, in which case it is about encouraging awareness and providing tools to help people set limits,” he says. “That’s what we had in the UK for the best part of a decade.”

The U.S., however, is more nuanced. “It is done at a state level and they are very new to online,” he says. “So, the frameworks are built with the land-based business in mind.”

Affordability and the libertarians

Then, as Cohen puts it, “there is a cultural issue around freedom of choice”. In the UK, it was noticeable that on social media there was much comment about the rumoured affordability measures representing an infringement of freedom of choice.

That would likely be amplified in the U.S. “People do resist being told by the government what they can and cannot do,” says Toland.

“There is that strain in America. But at the same time, they have decades of experience of regulating the land-based industry. Moreover, I don’t think saturation advertising is sustainable and already people are changing their language around sports-betting.”

He concludes that many U.S. states are only “a few steps away” from having a wider discussion around affordability.

“Obviously you have state-by-state and it will be very fragmented. There will be different rules. But they do look at each other and copy best practice. New Jersey is seen as the early model; you can imagine if they adopt a code around affordability, then other states will follow.”