Editorial: UKGC Management and Policies Push UK Players towards Offshore/Crypto Gambling Platforms

The scale of affordability checks imposed on gambling and racing punters has been described as disproportionate by various industry and market analysts following increased criticism faced by the competent authorities. The country’s gambling regulatory body has also been condemned for its position on the issue, especially after a recent survey revealed that 1 in 6 of its respondents have been asked to provide financial documents as evidence for their source of wealth.

Recently, the chief executive officer of the UK Gambling Commission (UKGC), Andrew Rhodes, has shared that the implementation of intrusive affordability checks had nothing to do with the serious damage inflicted on racing revenues. In his opinion, neither customers nor the industry should be enraged by the work of the country’s gambling regulator which has only aimed at protecting consumers from spending too much money on gambling services.

At the same time, the UKGC addressed local gambling and sports betting operators, making it clear that they need to feature proportionate thresholds above which customers’ financial circumstances are taken into consideration as a form of prevention against gambling-related harm. The country’s gambling watchdog also highlighted that any failure to do so could result either in massive monetary penalties for bookmakers or in the loss of their operating permit.

Mr Rhodes also explained that it was up to gambling and betting operators to decide how to satisfy this regulatory requirement. And still, companies were forced to ask their customers for bank statements, pay slips, and tax return statements in order to consider everyone’s individual financial circumstances.

UK Gambling Commission Gives Only Vague Guidelines to the Sector

In any case, the situation is complicated because the UK Gambling Commission has refused to provide a definition for “proportionate thresholds”, which is making it harder for operators to define clear boundaries between disposable and discretionary income, as well as to impose a clear measurement for average available income. This is exactly why the policy guidelines of the country’s gambling regulator have made it difficult for gambling and sports betting companies to operate peacefully.

On one hand, the lack of clear instructions put gambling operators in an uncomfortable position because they could suffer serious penalties for the lack of “adequate” (or, at least, for the UKGC) affordability checks. On the other hand, the vague regulatory guidelines still require companies to make sure they ask their customers for sensitive information but the intrusive checks could lead to an outflow of consumers, who are unwilling to provide additional information about their financial state.

As already reported by Casino Guardian, the stricter the affordability checks, the bigger the outflow of British punters who have preferred to turn to offshore or crypto gambling platforms online and place their bets with them rather than staying in the strictly regulated UK gambling industry.

UK Gambling Operators Pushed to Implement Controversial Affordability Checks That Cost Them Customers and Revenue

According to analysts, the outflow of high-roller customers to companies operating in the unregulated black market was almost inevitable, considering the degree to which British punters are facing intrusive and controversial affordability checks. Estimates provided by Regulus Partners earlier this year, have shown that about 20% of the turnover generated by the UK racing sector has already shifted to the black market, which means that betting revenue of about £80 million has been lost in the region.

The Big Punting Survey held by The Racing Post among more than 10,000 people, found that 16.6% of the inquiry’s participants reported that they had already been approached by local gambling operators asking them to provide various documentary evidence of their source of income and ability to afford their gambling activity, such as bank statements, pay slips, etc.

According to the affordability checks’ opponents, the prevalence of affordability checks contrasted with the scale of so-called gambling-related harm in the country. Campaigners say that problem gambling rates in the country are “microscopic”, so the imposed controversial checks have a much more negative impact because they are literally pushing customers away from the regulated gambling sector.

The aforementioned survey also revealed that 3.6% of the respondents had used the services of a black-market bookmaker within the last 12 months, while a further 11% of the research respondents know a person who had done so. According to some market data, British punters, especially younger people and so-called high-roller customers, tend to increasingly use illegal online gambling platforms and unlicensed gambling and betting products.

The regulated industry has long warned about the risks of losing its high-stake punters, with associated damage said to be able to result in significant loss of tax income for the UK Treasury and the sector’s finances.

UK Gambling Watchdog Faces Criticism for Ignoring the Black Market as the Actual Problem Hurting Local Punters

As mentioned above, the regulator of the country’s gambling market has faced enhanced criticism over the last year.

The UK Gambling Commission, however, does not seem to recognise the controversial affordability checks as a product of its own regulation, so it does not seem to take into account the consequences of its enhanced regulation policies and vague guidelines. Some market analysts have scolded the watchdog for its unwillingness to confess that the intrusive affordability checks have become a major reason for an increased outflow of consumers from the regulated gambling sector in the UK.

Recently, Casino Guardian reported that more than one-fifth of the people who place wagers on horse races have already been asked by local gambling operators to provide various personal and financial documents proving their source of income right before the beginning of the Cheltenham Festival that is set to take place in March. According to reports, many bettors, whose wagers have remained under the existing proportionate thresholds of local bookmakers throughout the rest of the year, are likely to be asked to provide bank statements, pay slips, and other financial documents and prove they can afford to gamble only because they tend to spend more money during the week when the popular racing event is being held.

At the same time, various gambling and betting companies that operate unlicensed and unregulated on the black market have remained under the radar of the country’s regulatory bodies, as they do not pay taxes and do not comply with any of the legislative and regulatory requirements, including counter-terrorism financing laws, anti-money laundering laws, and social responsibility regulations. That is exactly why the UK gambling sector has been blaming the UKGC management and policies for turning a blind eye to the actual problem and implementing intrusive affordability checks, calling them “offensive” and “absurd”.

The refusal of the UK Gambling Commission to even admit its involvement in the implementation of the proposed affordability checks has been strongly criticised by the regulated gambling sector in the country, making the situation even more serious. The watchdog’s unwillingness to proactively participate in the roll-out of the newest form of responsible gambling checks could lead to catastrophic consequences for all participants in the gambling market – from operators to customers and regulatory bodies, but the country’s Gambling Minister Paul Scully has also backed the watchdog, saying it was not the UKGC’s job to determine whether a customer was able to afford their gambling expenditures or not.

The lack of stability in the Government is also concerning. Paul Scully has spent less than four months in the Gambling Minister’s role and his successor has not been appointed yet. The person who will take the job will be the sixth minister since the beginning of the Government’s gambling review which has already been delayed several times and which everyone hopes to provide the necessary clarity in the sector. So far, the long-awaited gambling reform does not seem to be among the priorities of Prime Minister Rishi Sunak and it remains to be seen whether this could change in the weeks to come.

Daniel Williams
Casino Guardian covers the latest news and events in the casino industry. Here you can also find extensive guides for roulette, slots, blackjack, video poker, and all live casino games as well as reviews of the most trusted UK online casinos and their mobile casino apps.

Related news