Financial Risk Checks: New Updates from the Gambling Commission

The Gambling Commission has provided an update on the financial risk checks which were proposed in the gambling white paper in April 2023 (White Paper) and subsequent consultation which the Gambling Commission undertook between July and October 2023 (Consultation). In a recent blog update, Tim Miller, Executive Director of Research and Policy the Gambling Commission, outlined what approach the Gambling Commission will take to these checks as a prelude to the full Consultation response, which the Gambling Commission has now confirmed will be available in March 2024.

Background

The White Paper proposed the implementation of new financial risk checks which would be designed to tackle gambling harms. The proposals were taken forward in the Consultation and were designed to tackle three key risks: (i) binge gambling; (ii) significant unaffordable losses over time; and (iii) financially vulnerable customers. Two types of checks were proposed:

1. Financial vulnerability checks (Vulnerability Checks): light touch financial checks were proposed to identify customers exhibiting elevated financial vulnerability. Vulnerability Checks would use publicly available data to flag issues such as bankruptcy orders and histories of unpaid debts. The proposals put forward required operators to conduct Vulnerability Checks on customers who had suffered either:

• a £125 net loss within a 30-day rolling period; or
• a £500 net loss within a 365-day rolling period.

2. Financial risk assessments (Enhanced Checks): enhanced financial risk assessments were proposed for customers exhibiting higher loss levels. Enhanced Checks would be primarily based on credit reference data rather than data from public sources, meaning Enhanced Checks would be highly dependent on data sharing channels existing between operators and credit reference agencies. The proposal was to carry out Enhanced Checks where a customer had suffered:

• a £1,000 loss in a rolling 24-hour period, indicating binge gambling; or
• a £2,000 loss within 90 days, indicating significant losses over time.

The Consultation also proposed introducing lower thresholds for triggering Enhanced Checks where the customer in question was aged 18-24.

Gambling Commission Update

Vulnerability Checks

The blog update indicates that a two stage implementation process will be followed for Vulnerability Checks. Initially operators will be required to conduct Vulnerability Checks at a higher threshold, but this threshold will revert to a lower level later in the year.

The exact threshold which will be implemented at each stage will be revealed in the full Consultation response, but the Gambling Commission has confirmed that Vulnerability Checks will only need to be based on publicly available data and other data, such as the customer’s postcode and job title, will not need to be assessed. This is likely to require a change to most operators’ current practices, as many already this more specific information into account.

Enhanced Checks

The Gambling Commission has indicated that a pilot phase for Enhanced Checks will be launched to test data sharing operations between gambling operators and credit reference agencies. The pilot phase will last for 4-6 months and the LCCPs will be updated to reflect the new obligations that gambling operators will be subject to. It is not yet known which operators will take part in the pilot, but the Commission has stated that it will work closely with industry to make sure that it includes a spread of different businesses – such as betting companies and casinos, as well as some variation in the size of the organisation.

The blog update states that operators will not be assessed on how they act on the data revealed by Enhanced Checks during the pilot phase and instead the pilot will be limited to testing data sharing channels. However, operators will continue to be expected to protect consumers by implementing their own existing consumer safety controls and remaining compliant with regulatory requirements.

Impact

Financial risk assessments have attracted much comment following the publication of the White Paper and have been one of the more divisive issues. On 26 February 2024, Parliament debated a petition which received over 100,000 signatures calling for the Government to abandon the planned implementation of affordability checks. Despite this pressure, the blog indicates that the Government will be proceeding with financial risk checks in some form in the near future.

The Government has stated that it intends to implement proportionate, frictionless systems for financial risk checks. At this stage, it is too early to comment on whether these outcomes will be achieved as until such time as the full Consultation response is issued, with the relevant thresholds outlined, the additional burden such checks will add to gambling operations remains unclear. We will provide a further update on financial risk checks when the full Consultation response is issued.