Light touch financial vulnerability checks: necessary safeguard or overreach?
In August this year, the Gambling Commission (UKGC) introduced light touch financial vulnerability checks as a way to safeguard those who might not have the means to support their gambling hobby. As is often the case though, controversy soon followed. Why? Let's take a look at what this means and the key issues:
- What are financial vulnerability checks?
- The £150 threshold
- 'Risk flags'
- Challenges for casinos
- Privacy vs protection
- Black market risks
- Is there a way forward?
What are financial vulnerability checks?
Financial vulnerability checks aim to identify online gamblers who are spending beyond their means.
The checks take place when a customer makes net deposits over a certain amount, in a month, (£500 at the moment, decreasing to £150 in February 2025).
The check requires the casino or operator to look into publicly available data on the customer including if they have a: bankruptcy order, county court judgement, individual voluntary arrangement, high court judgement, debt relief order or equivalent.
They can also choose to look into further publicly available data, including the postcode the customer lives in, as well as their occupation.
With this completed, the casino will choose the action to take to ensure the financial safety of the customer.
The 2-stage rollout
Despite receiving a ‘negative’ or ‘very negative’ response from 66% of respondents to their survey regarding the implementation of financial vulnerability checks, the UKGC decided to press ahead anyway.
The checks came into force in August 2024 with an initial £500 threshold. This threshold relates to net deposits (deposits less withdrawals) of every customer, over a 30-day-period. If, at any point, a customer’s net deposits exceeds the £500 figure, a financial vulnerability check will be conducted.
From February 2025, the threshold for net deposits will become even lower, just £150 in any 30-day-period.
The £150 threshold: a turning point?
For many people who enjoy a bet, or play casino games regularly, a net deposit of £150 over a 30-day period might not seem like a big spend. In fact, there are plenty of casino welcome bonuses that match up to £500 (or more) on a single deposit.
If you signed up and took the bonus to just £150 of its value, and then didn’t make a withdrawal during your first month, you’d be subject to a financial vulnerability check.
If the checks deemed you financially vulnerable, then action would be taken by the casino. However, if the checks deemed you to be ok, you could continue uninterrupted and wouldn’t be subject to another check for 12 months.
Why the drop from £500 to £150?
At £500, the threshold for financial vulnerability checks seems pretty reasonable. That’s a fair spend for even those on a relatively high income. However, at £150, these checks will encompass a far greater number of players.
One of the reasons for the drop is to give casinos and operators time to implement these checks in a ‘frictionless’ manner – a word that the UKGC used no less than 7 times in their summer consultation.
Risk flags: an impractical solution?
Once the player has triggered a financial vulnerability check, it’s then up to the casino to check for ‘risk flags’. For many, this is the most problematic part of this new scheme. How do we check someone’s financial status without being invasive or prejudicial?
How risk flags are determined
The UKGC has ruled that the best way to check someone’s financial status is to look into their:
- Debts – bankruptcies, Individual Voluntary Arrangement (IVA) etc.
- Gambling history
- Assumed income
- Postcode
Much of this is collected during the Know Your Customer (KYC) procedure. The rest is information that can be freely accessed by anyone.
The UKGC believes that this shouldn’t, therefore, pose an ethical problem. However, the problem runs much deeper than where the information comes from.
The ethical dilemma of postcode-based checks
What has your postcode got to do with your ability to fund your gambling hobby?
It’s an interesting question. For the UKGC, your postcode correlates directly to your likely income, and therefore, your ability to pay for your gambling hobby.
If you live in Clacton-on-Sea (the most deprived postcode in the UK) then, according to the UKGC, you have less ability to fund your gambling. If you live in Runnymede, Surrey (the richest postcode) then you’re fine to carry on as you are. Massive assumptions.
This reinforces classist stereotypes – those we have about people who live in impoverished areas, and also, the ‘kinds of’ people who gamble.
Using the Clacton vs Runnymede scenario, consider this:
Retired couple in Clacton, mortgage-free, living modestly with a combined pension of £38,000. Compared that to the 40-year-old mortgaged-to-the-hilt executive in Runnymede with 2 children in private schools, credit card debts of £16,000, running two cars, private health insurance and a busy social life including 2 overseas holidays a year on £120,000 a year… Who can more readily ‘afford’ £150 to gamble with each month?
Operational and logistical challenges for casinos and operators
Let’s take a look at some of the challenges that could arise in implementing light touch financial vulnerability checks.
Cost and complexity to implement
Implementing light-touch financial vulnerability checks could incur considerable costs – particularly in the case of smaller operators. These checks require:
- Regular (daily) updates to check thresholds over 30-day-periods
- Real-time data processing for threshold checks and data sourcing
To do this successfully, you either need advanced technology, trained personnel, or, most likely, a combination of both.
Needless to say, none of this is cheap, especially if the checks are to be carried out in a ‘frictionless’ manner.
“Frictionless” in name only?
All communications indicate that the UKGC is incredibly keen we understand these checks will be ‘frictionless’ in their implementation. But is this realistic?
For larger businesses that can afford the technology and training, it’s possible that these checks could indeed be frictionless. They happen totally in the background and unless a financial risk is found, the customer is none the wiser.
However, what about smaller operators – those who cut a few corners to save money? It seems possible that temporary account suspensions could take place if the checks take longer than planned.
If this happens, then trust in the operator is quickly eroded. It’s likely too, that it will be the smaller casinos who end up taking the hit.
It’s hard to see how a relatively deep dive into someone’s personal finances by an unknown entity can, in all good faith, be described as ‘frictionless’. But it’s certainly a way of trying to present the process in a softer light.
The privacy vs protection debate
There are some debates that will never be settled and the privacy vs protection debate is one of them. If you’re libertarian then you’ll probably have been outraged at the suggestion of financial affordability checks, if you’re more statist, you’ll likely think it’s a sensible idea. But why?
Privacy concerns and government overreach
A good way to look at the first part of the puzzle is to consider at what other times the government monitors our personal financial decisions:
- When we make very large (typically £20,000+) transactions
- When we pay our taxes
- When we claim benefits
That’s it. Except now, they also look into them when we spend £150 a month on gambling.
So, can we expect government agencies to start looking at other parts of our lives?
The rationale for this is that we should stop people who can’t afford to gamble from being able to gamble. How might we feel if this government monitoring extended to other ‘unhealthy’ habits?
- You spend £150 per month on alcohol and are flagged as a risk. Your postcode is checked, and every round that you buy in the pub, or bottle of wine you buy from the corner shop, is reported to the government.
- You spend £150 per month on cigarettes (that you’d planned to last you for the next few months) but you’re flagged as a risk. Your ‘teacher’ salary isn’t deemed enough for this to be affordable, so your face is sent around to all of the UK’s shopkeepers.
These examples seem extreme, but both deal with the same threshold and focus on a behaviour that is deemed addictive (and expensive).
The impact on players
Let’s take a look at the impact on just the players who are flagged and subsequently monitored.
A major concern is the invasion of their privacy. The idea of somebody being able to poke around in your financial history is unsettling.
Many players won’t be aware that these checks are even happening. If they were to trigger one and be deemed ‘at risk’ it might be a nasty surprise to find an email, or inbox message, from their casino telling them so.
If they dislike these checks strongly enough then what’s the alternative? For the person who spent £150 on alcohol, perhaps buying it from a friend who makes their own. For the person who spent £150 on cigarettes, maybe getting their friends to bring them back from abroad. So for the person who spends £150 on gambling?
The risk of a black market shift
The black market for gambling in the UK is growing, most notably in young people and heavy gamblers. These sites often offer bigger bonuses, better prices, and fewer rules. You might not have to complete a KYC and you certainly won’t be subject to light touch financial checks! But there’s a trade off. These sites aren’t safe.
They sometimes operate with a licence from unscrupulous regulators, sometimes they operate without any licence at all. This means that their customers have no legal recompense if something goes wrong.
In heavily licensed markets, the blackmarket flourishes. If the choice was to have your every bet monitored at a licensed site, or to bet freely at an unlicensed one, which would you choose?
Is there a way forward?
Helping those who struggle with gambling addiction, or those who aren’t able to gamble within their means is important. The UKGC and operators have a duty to protect all of their customers, especially the most vulnerable. The question is how they do it.
For some, financial vulnerability checks are the answer. If they truly work in a frictionless manner and only target the top 20% of spenders, they shouldn’t be too intrusive. For others, these checks still feel too much like an invasion of privacy – not to mention potentially pushing vulnerable gamblers into the black market or concerns around postcode discrimination.
As is often the case, there isn’t a cut and dry answer to this problem. For me, the flag system that’s recently been piloted feels much less invasive, allowing people to voluntarily flag themselves and seek help. So too does the continued work of GamCare, GAMSTOP, and other brilliant companies and charities.
Those with gambling problems should be helped, but I don’t think the liberty to spend our money how we choose to should be removed. That’s the top of a very slippery slope.