Explainer: what is the latest on affordability checks and how might they fuel the black market?

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What are affordability checks?

Official plans for two tiers of financial checks on customers were proposed in the last government's gambling white paper published in 2023.

In August 2024 the Gambling Commission began a trial of the higher tier of affordability checks – or financial risk assessments as they have been termed – which it was promised would provide frictionless checks for those spending £1,000 on gambling within 24 hours or £2,000 within 90 days to ensure they could afford it.

What are the problems with the checks?

Previous checks introduced by gambling operators following pressure from the Gambling Commission led to customers being asked to provide personal financial information such as bank statements in order to continue betting.

• Racing fans urged to write to their MPs as sport calls on culture secretary Lisa Nandy to halt affordability checks 

When surveyed, the majority of those who were asked said they refused and once they ran out of outlets in the regulated gambling market said they either gave up or found operators to gamble with on the black market. Racing's leadership believes the sport has lost tens of millions of pounds in betting revenue as a result.

The new system was supposed to avoid that. However, it was soon reported there were major problems with the pilot, with claims that it was throwing up inconsistent data from credit reference agencies which could produce different findings for the same individual, along with other issues.

What are the consequences and why has the BHA asked ministers to pause the checks?

The limitations that have been pinned on the pilot increase the chances that operators will have to request financial information from punters and under the new system such checks could become routine.

The Betting and Gaming Council estimates that around 300,000 racing customers would hit the thresholds, with 120,000 of them being asked to submit personal documents to prove affordability of whom 96,000 would refuse. It also said independent modelling by EY indicated that more than 44,000 customers could switch to black market operators as a result.

Up to £60 million could have been staked illegally on the Cheltenham FestivalCredit: Andrew Parker - Grossick Photogr

What is the scale of the illegal betting market in Britain?

A report compiled by PwC last year found that around six per cent of all online betting and gaming in the UK now takes place on black market websites, an increase from its previous estimate made in a report published in 2021 which put the black market at 2.3 per cent of total spend.

The Betting and Gaming Council used that figure to estimate that £60m could have been staked illegally on horseracing during Cheltenham week alone.

Another recent report from the International Federation of Horseracing Authorities claimed that the number of unique customers visiting 22 unlicensed sites taking bets on British racing had grown by 522 per cent between August 2021 and September 2024.

What is being done to tackle the black market?

After last year's budget the government said it was "not complacent" about the risks of a growing black market, adding it would allocate an additional £26m to the Gambling Commission over the next three years to tackle the illegal market.

Read these next:

Racing fans urged to write to their MPs as sport calls on culture secretary Lisa Nandy to halt affordability checks 

'I struggle to get my head around it' - Lee Westwood laments affordability checks and provides his Grand National and Masters picks 

'Black market bookies work on word of mouth and are difficult to stop - which is why affordability checks need to be eased off' 

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