New Horizons in UK Responsible Gaming Practices

In the summer of 2023 the UK Gambling Commission issued further clarification on requirements and expectations from the Gambling Review White Paper, including around affordability checks. In this episode, Adam Doyle, Head of Gaming for the LexisNexis® RiskNarrative™ platform speaks to gambling compliance expert Fiona Hughes and Infinian Data Solutions Operations Manager Michelle Benson, about the guidance, how it will impact gaming providers, and how the right data can be utilized to optimize affordability checks, providing a seamless experience for players while protecting vulnerable individuals. 

Join us at Risk Ready Malta 2024 - Gaming & Gambling in Focus on April 11 in Malta. Register here.

If you'd like to learn more about the topics discussed, you can reach out to the experts directly: 

• Michelle Benson
• Fiona Hughes
•  Adam Doyle

DISCLAIMER: The information provided in this podcast is for informational purposes only and is not intended to and shall not be used as legal advice.  The views and opinions expressed in this podcast are solely those of the speakers and do not necessarily reflect the views or positions of LexisNexis Risk Solutions. LexisNexis Risk Solutions does not warrant that the information provided in this podcast is accurate or error-free.

Transcript

Speaker 1 0:10

Hello everyone, welcome to the Red Tech Pulse podcast. I'm your host, adam Duel, head of Gaming, and today we're carrying out another podcast to delve further into the exciting world of the gambling industry. Today we're discussing the highly talked about white paper consultation document around UK affordability. This was proposed back in April 2023 and nearly a year later, we're still discussing it and trying to understand the requirements and expectations. Today we've made to discuss this awesome veterans in the industry, fiona Hughes and Michelle Benson. So welcome to you both. Fiona, do you want to start first, and then Michelle for a quick introduction.

Speaker 2 0:49

Yep. Thank you, adam. Hi everyone. So I'm Fiona. I've worked in compliance for around 20 years now. For my sins, 10 of those have been in the eye gaming world. I've seen many changes and I've seen many ups and downs of our industry and the compliance world as a whole. So looking forward to seeing where this conversation heads today and how we can work better together to have stronger data and ideal sort of financial risk checks.

Speaker 1 1:27

Perfect Michelle.

Speaker 3 1:30

Yeah, hi, I'm Michelle. I'm the operational lead for Infineon Data Solutions. Infineon is a data and analytics company with a real focus on affordability and financial vulnerability, and it's great to be involved in a wider discussion on the implications of what the white paper means to the industry. Moving forward.

Speaker 1 1:49

So let me set the scene on what I'd say has been quite a saga to date. Summer 2023, the UKGC issued further clarification on requirements and expectations from the white paper document on affordability checks. They were broken down into a supposed frictionless two-tier approach. So the first one was a light touch for financial vulnerability, and this would be using publicly available data to flag issues such as bankruptcy, historic unpaid debts, so basically stresses to a person's finances. This proposal was put forward to carry out whether a player had either suffered 125 pound net loss within 30 days or 500 net loss within 365 days rolling. The second check was a more enhanced financial risk assessment. This was primarily based on credit reference data, so the enhanced stuff would be looking to see if there was any shared information out there showing that this person had significant debts or if they'd seen it across other operators. Again, this was looking to see when it had been suffered across a few different angles. So a thousand pound loss within a roll in 24 hours, which would indicate binge gambling, and then a 2,000 loss within 90 days, including significant losses over time. There was also a final one which was put in there which was looking to get a lower threshold for people between the ages of 18 to 24, because from research it shows there probably the higher risk to the different age demographics.

Speaker 1 3:17

22nd of February this year, tim Miller, who's the Executive Director of Research and Policy, was in the UK GC. He then announced to ease the introduction of these checks. They would initially come in at the higher level rather than implementing it from the short one. First, this is allegedly over a short period of time and then, as I said, towards the back end of this year, reverse to the lower threshold, then going into the higher threshold. It's been estimated that this POC pilot is going to be run for approximately four to six months Throughout the pilot.

Speaker 1 3:48

What they're saying is that an operator does not have to act upon the data that is coming back, but they can use it and share it with other operators in the UK GC to look at how things should be implemented, moving forward. And finally, 26th of February this year, parliament debated on a petition which received over 100,000 signatures, calling for the government to abandon the planned implementation of affordability checks. So I hope that sets the scene of where we're going today Before we sort of dig into it. Fiona, coming from an operator's background, can you sort of explain the challenges that we see for checks like this in the UK, but also going into markets like the MGA as well.

Speaker 2 4:32

Yeah, of course. I mean there is a degree of concern from operators that you know the direction that we're heading in. From a commercial aspect, these conversations always bring debate and lively discussions. But if we take the positives that we could look at, we have been doing this for a long time, or attempting to do financial risk checks for a long time, and this has been mainly a mixture of manual checks. Some of us have been able to integrate technology and data generally, ending with human checks at the end of that process. So I think you know we can make these checks much more efficient with the support of the regulation and with the consistency of the regulation that's coming here.

Speaker 2 5:31

We often see a difference of opinion via audits and assessments. We often see that one operator could be doing things differently to another operator. So I do think that this will bring a more well-rounded approach for us to work towards. There's also a lot of talk about this move pushing players to the black market. I don't believe that that will happen. I think that because we're going to be approaching this as a mass market, it will become the new normal, so players will naturally sign up and agree to move forward with these checks.

Speaker 1 6:12

Brilliant. Thanks for that, Michelle. What data would you say is traditionally available for operators to carry out these different things that the UK GC are now asking operators to carry out?

Speaker 3 6:30

So there's a few different approaches here. That initial light touch that is mentioned both in the white paper and in the recent publication from the GC is definitely going to come from that kind of public CRA available data, so things like the CCJs and insolvency flags. However, we know, due to the principles of reciprocity, that the CRAs are actually limited on what they can share with operators in this industry and although it's a good starting point, there needs to be additional levels of data on top of that and certainly when the customer hits the higher loss kind of thresholds. One thing I would say about the CRA data is that by the time a customer has actually got a CCJ or an insolvency flag, they've already been on their financial vulnerability journey for some time and although they are recommended at the lower level checks, operators need to really consider if this kind of indicator is timely and recent enough for the more enhanced checks. Another kind of data that's been kind of offered as a possible solution here is the open banking data, and we know, talking from operators ourselves, that conversion rates for open banking are really low. Therefore, the customer coverage is low and open banking goes against the very nature of the frictionless checks that was that were recommended in the white paper.

Speaker 3 7:54

Alternative data, such as credit application data, which is the data that Infini and uses to power their affordability and vulnerability solution, isn't currently widely used in the market at the moment, but it can add real value when assessing a customer's financial vulnerability and affordability status. This kind of data is more timely than the basic CCJ and insolvency flags Because it's more up to date, it gives a recent view of a customer's financial standing and it is completely, a completely frictionless check. The one thing I would kind of caveat all that with is there's no silver bullet here. Every data set has its own benefits and limitations. It's important that operators are proactively using everything at their disposal to make a fully informed decision about a customer's financial and vulnerability position, and I think an overlap of a different number of kind of data sources here the initial CCJ check, open banking, if you can get it from the customer and alternative data is really the way forward.

Speaker 1 9:00

Yeah, thanks a lot, michelle, and I suppose a sort of a case study that I can use. I know I spoke to a friend recently and he had a CCJ and I know with some of the data that's provided on CCJs it just says you have a CCJ. Some don't actually go into the value of it. His issue basically was he was changed as a mobile phone provider. He canceled the direct debit because he thought it was the end of it and it wasn't, and then three months later he's actually found out that he's got a CCJ. So, to your point, that's not really actually telling you anything, is it? Fiona? Just quickly going back to you and not trying to throw you under the bus here, but you mentioned the point around. You don't think people are moved to the black market. I gamble myself, and a lot of the times they're looking for the best bet and the cheapest one. So loyalty is pretty much out there. Do you not think? If there's a bit of additional friction, do you not think people will be tempted to move them?

Speaker 2 9:58

I mean, there's always going to be that element of temptation, because these types of companies are obviously out there and they're advertising. But I do believe that if we look at markets like Sweden and Germany, for example, that as these conversations grow and as the media supports this way forward, that actually players will want to be protected and they will ask to you know what have we got in place? So I do think it's an educational piece and I do believe that with the right framing of this, then it will only be, it will only support the relationship between the operator and the player and it will make that stronger and more trustworthy.

Speaker 1 10:48

Yeah, yeah, no, I get your point there. And, fiona, whilst we're sort of on that, from from your experience you know, covering both the UK and sort of international markets, do you see or have you seen any ways where players are trying to manipulate? You know sort of these kind of checks any red flags operators should be looking out for?

Speaker 2 11:09

Yeah, I mean, players will always find a way and it will be the more vulnerable. Unfortunately, this will upset some players, but I think those players will generally be the players that want to gamble beyond their means, and those are the players that we want to support and that we want to help. So we saw it with. You know the self exclusion we saw it with many years ago when we simply started to verify players. It's up to us really as an industry that we work closely with reputable suppliers to make sure that we are monitoring closely any changes in the checks that we run, to make sure that we can find any possible loopholes or gaps that could help players perhaps get around such checks.

Speaker 1 12:07

Yeah, and I think when people look into the gambling industry from the outside, you know the online industry. It's been going 98, 99 early 2000. So it's still an evolving and improving market, isn't it? And I don't think people realise that operators are already carrying out a significant amount of checks behind the scenes, so constantly looking at players risk behavior changes any flags.

Speaker 1 12:29

You know there's a lot of communication behind the scenes, going to the email, sms, call communications. So from what I've and correct me if you disagree, but from what I've seen, where people have you know instances where people have fallen through the gaps. We, you know a high percentage of the times processes are put in place and they're doing what they're supposed to do when they haven't. I think it's from you know, it's when people are not using technology. It's human error. Some operators have a significant amount of deposits with jorals that are constantly going through and it's virtually impossible to just throw people at this.

Speaker 1 13:09

Michelle, the tiered approach that the UK GC has suggested is supposed to be frictionless. As we know, the likes of open banking isn't frictionless. We've seen a very low conversion rate over the last few years to sign up, from as low as sort of seven to 13%. Can you sort of give us an insight on the sort of the credit data that's available out there and the way that you believe, moving forward, it can be used to sort of cause as least friction for both the operator and the player?

Data-Driven Financial Risk Assessment in Gaming

Speaker 3 13:37

Yeah, I agree, adam. I think open banking has its place when the operator can get a customer to agree to go down that journey. It's by no means a frictionless check and still there's still a lot of manual hours to extract the relevant data and to check its validity. Credit application data, which is what we use here at Infineon to power our solution, can provide really granular level insight, not only into a customer's income and expenditure habits, but also provide kind of behavior and credit application information. So the data can be configured to look at specific financial risk factors, which is the key point here, because it isn't all about income and expenditure when we're talking about. We can pinpoint where a customer is displaying a really clear financially risky behavior. And I'll give you an example of what this looks like and how we use it to kind of determine a customer's financial vulnerability.

Speaker 3 14:38

A simple example of what this would look like is we see customers making high cost short-term credit applications and declaring on those applications that they're borrowing money to pay bills or put food on the table. Clearly, if a customer is declaring that reasoning on a credit application, something's happened in that customer's life. That means that they're looking for credit quickly just to survive on a day-to-day basis, so that for us would be a high financial risk factor, and the operator then can proactively take steps to either support that customer with lower spend or loss limits or even engage directly with the customer to try and understand their position in more detail. Another example would be within the credit application data that we harvest, we can see customers entering the database multiple times over a short space of time. That high velocity turnover of application shows that the customer is desperately seeking credit. We can also provide the operator with insight into whether those applications were actually accepted for credit or not, or whether those customers have been referred for additional support through services such as credit repair products.

Speaker 3 15:51

In every proof of concept that we've undertaken, both in the financial services world and the gaming sector and we've done quite a lot in the gaming sector more recently where we've had a known outcome, the more financially vulnerability indicators we can identify, the poorer outcome for the customer. I would say, though, that it all sounds a little bit doom and gloom, doesn't it? But the data can also be used to show positive outcomes as well, so we're able to identify where a customer has had a loan application accepted after just one application, for what we see as an aspirational purpose, such as purchasing a car or home improvements. So we want to look at this kind of alternative data is giving not only a view of vulnerability and highlighting those risk factors, but also pinpointing some positive factors as well that can be taken into account when operators are making their financial vulnerability and affordability assessments, and it's really just the balance between the two in getting this assessment process kind of right and making sure that the operators are making the right decisions.

Speaker 2 17:03

I really like the fact that Michelle really knows the data and the product and I think it touches on what we were talking about at the beginning, where it's super important with this move that operators can facilitate these checks with trustworthy, reputable suppliers that know and understand the data. We've been working in financial services. We've been doing these checks for years and it's nothing new in that industry. So if we can cross this over to the gambling industry and what we've learned from financial services and the checks that we do, the agreements in principle and so forth, I think that it can be a real positive of building player profiles, understanding their backgrounds, and I think it's another layer. It can also lessen the risks of money laundering and fraud.

Speaker 1 18:03

Yeah, and I think to your point, fiona. The data is out there and I think at times it can be very hard that operators get beaten with the stick but they're not being allowed to use the tools that other, like the financial services, are using in the market there. And then, michelle, just going back to the things that you were covering, through our relationship and the many POCs that we've done, I think one of the things which I really think is good about the data is we know, even when a regulator puts in a line in the sand, you might have one operator which is very sort of higher risk or a lower risk, and I suppose the good thing is it's that flexibility. Isn't it where the operator can interpret the data as they want and then sort of align it across their player base?

Speaker 3 18:43

Yeah, absolutely. The real beauty about this kind of alternative data is it is completely configurable, and we know that operators look at this completely differently to other operators, so to make sure that it aligns with the operator's own risk profile, it has to have that kind of fluidity and be agile. So we know that the operator can configure this data specifically to their own risk profile and target what their own financial vulnerability and risk factors would be and therefore inform what their assessment process looks like.

Speaker 1 19:22

Perfect and I'll throw this question to both of you. With all these things so obviously we see, with the likes of open banking where there's a lot of consent, and from conversations that Fab with players and being a player myself, I know that people get a bit wary there what's the balance between sort of data privacy, player protection and sort of enforcing these things? So both of you can answer that, or none of you or one of you.

Speaker 3 19:46

From me.

Speaker 3 19:47

There's a really fine line here, however if you only did touch on this earlier regarding the customer behaviour.

Speaker 3 19:54

Once the consumers come round to the understanding that additional checks are going to have to be done because the regulator is going to actually mandate these and require the operators to undertake them, the customer behaviour will change we've seen it in the financial services industry and it will really only be those customers with a high vulnerability financial position that are going to have any objections. Operators need to be using everything at their disposal to make a fully informed decision to protect those most vulnerable customers from unaffordable losses. Ultimately, the important thing is to make sure that the data sharing is proportionate to the risk, but also that we're pinpointing only the most vulnerable customers, and I agree that, as Fiona alluded to that earlier, players will become more accepting of these checks. I don't think people who have anything to hide will have any objections, and the primary focus of operators really should be protecting the consumer and making those losses manageable and, in particular, as they were called out in the white paper, in that younger population.

Speaker 2 21:01

Yeah, I totally agree with Michelle on every point there. I think it's only going to support that relationship and the more it's talked about and the more operators can speak about it, the better that the consumer will understand and it will protect both the player and the operator. And I think the more data that we've got, the more access that we've got, the better that we can. We can move forward with, you know, a less risk of players indicating half. The earlier that we can intervene from a compliance perspective and from a player protection perspective, the better.

Speaker 1 21:46

Yeah, and I think your point before Fiona it's an education process. You know, we look at the Swedish market. It's standard that you dive into everything and if they don't get asked that there'll be a bit where the operator. So I think for me it's very much that there seems to be not everyone's aligned with what's happening. But if everyone's aligned it then it'll mean that no matter where a player goes, whichever operator, they get asked the same questions and I think when that comes that's where the players will be educated and they understand that a bit more.

Speaker 2 22:14

And we've got that word that we keep, we keep hearing, which is frictionless. The way that we are all doing it at the moment is far from that, and that's why we feel the bumps in the road and that's why we feel the pushback. So this, this move, will be what we want it to be. So the players won't feel that that check, and they won't feel that change.

Speaker 1 22:41

So what does this mean? From my understanding, this is telling operators it's coming. You need to start looking to implement services within your process because once this pilot's done, it will be mandatory and the technology and the data is out there and it can ensure operators a line of regulation with the minimal minimal impact to the players, but also themselves. Michelle Fiona, any final thoughts from you both?

Data and Regulation in Gambling

Speaker 3 23:10

Yeah, just from me. I think we understand that this industry is going through a huge transformational process. Here. The next six months are going to be really divisive in terms of where the regulator wants this industry to go and where the operators want it to be, because there is kind of some disparity there. I think after the white paper, one thing to say is we know the challenge from the operators is that they're really kind of nervous about taking on new data because they think it's going to have not only a commercial impact on their business but be detrimental to their customers.

Speaker 3 23:44

Additional data that we use, such as credit application data, by its very nature is just not designed to restrict huge swathes of customers. This kind of data can be configured specifically to focus on those most vulnerable customers with a really quick, easy, frictionless check to make sure that operators are giving the support that is needed to those highly vulnerable customers. As you said, adam, the data and the technology are out there. A positive way forward would be for the operators to just be really proactive and get in front of this before the new regulation is forced upon them, because, like you say, it is coming. That way the data can be used in a really positive way, rather than it being seen as a commercial challenge to their business and something that customers will not accept.

Speaker 1 24:31

Fiona.

Speaker 2 24:32

Yeah, I totally agree. I think the sooner that we can work as an industry with this data the better, because it's all about understanding, it's all about collaborating and it's all about monitoring and understanding where it fits and what we can learn from it from a more sort of international perspective. I think internally it will help us understand each market much, much better and understand the needs for players in each country and each jurisdiction, and to see the gaps and to see the needs.

Speaker 1 25:05

Thank you Well, on the 11th of April myself, fiona and Michelle we will be heading on the road to Malta alongside some of the specialists and further discussing any amendments and changes that we see with the UKGC affordability, but also discussing the recent amendments that we saw in January with the MGA to where they're looking to develop a European standard on markets of harm. The MGA's desire is to create a safer environment to gamble responsibly, and what data and technology is out there to help with this? If you're interested in learning more, we'll include links in the show notes including event details and all our contact details if you want to reach out. Fiona and Michelle, thank you both for your time today and look forward to doing this face to face in warmer climates. Thank you all.

Speaker 2 25:50

Thank you, thanks, adam.