It is just over three weeks since the government published its long-awaited gambling white paper.
It had been more than two years in the making. During that period, repeated delays to its publication coincided with punters being caught up in affordability checks from bookmakers acting under pressure from the Gambling Commission. Without clear guidance, checks were introduced intrusively and haphazardly, angering punters while directly hitting racing's finances.
Nevertheless, those hoping it would be the final word on gambling reform were left disappointed. Or, as law firm CMS described it, "the arrival of the white paper is rather only the beginning of the end of the uncertainty the industry has lived with over the past two years".
Clearcut proposals setting out just what was required of bookmakers were thin on the ground. Instead, the details will be thrashed out over the course of several consultations, to be launched later this summer.
In the meantime, this is what we know, and what we don't know, about the key issues that will affect punters and racing.
Under the government's proposed model, a financial vulnerability check will take place when a customer records either a £125 net loss within a rolling month or £500 net loss within a rolling year. What will happen if you are subject to one of these financial vulnerability checks?
According to the white paper, someone subject to such a check will not notice it has even happened, with "frictionless" checks for things such as county court judgements and bankruptcies taking seconds to process.
Most of the main bookmakers are already carrying out such checks using credit reference agencies (CRAs) such as TransUnion, Experian and Equifax. The simplest and arguably likeliest course of action would be that, after the Gambling Commission has gone through its consultation, such checks are made standard for the industry through changes to the licence conditions and codes of practice (LCCP).
What will happen if you are subject to an 'enhanced spending check', which is set to take place after a net £1,000 loss in a 24-hour period or a £2,000 net loss within a 90-day period?
The white paper says the majority of such checks would involve credit reference agencies and would not interrupt the customer journey, with a CRA providing information such as an estimate of overall disposable income.
However, unlike financial vulnerability checks, there is no off-the-shelf solution to enable frictionless enhanced checks.
As Flutter Entertainment chief executive Peter Jackson put it recently, the checks would require "technological solutions to be put in place and they are not there yet".
Therefore, further information may be requested under enhanced checks through open banking – an opt-in system for sharing financial data such as your balance or transactions with third parties that ordinarily only you or your bank would see – or via the provision of personal documentation, as is widely happening already.
Enhanced checks will be part of a Gambling Commission consultation this summer and changes will have to wait until a frictionless solution is available. What happens if a solution to frictionless enhanced checks is not found has not been discussed.
How will bookmakers interpret the results of these checks and will checks be run repeatedly every time you hit a threshold or just once per customer?
In the case of a financial vulnerability check, the white paper does not go into detail. It says that if concerns are raised an operator must "respond accordingly" and, even more vaguely, that a "wide range of actions may be appropriate". The government has, in effect, handed on responsibility for working out what that means in practice to the Gambling Commission. It is a similar story with enhanced checks, although the white paper does specify that an operator might apply limits to an account or close it completely.
Given this generalised language, much will depend on what happens in the consultation.
The Gambling Commission might decide on a prescriptive approach, laying down rules for operators to follow when triggers are hit and data is received. Or there could be something more akin to the current approach under which an operator considers the data alongside the overall profile of the customer and other possible markers of harm, and ultimately has to make a decision on what action is appropriate.
As a sop to those who felt the government had no place interfering in an individual's spending decisions, the white paper does state that neither the government or Gambling Commission "will set universal rules on what proportion of a customer’s income they should be permitted to gamble".
But if that duty is effectively delegated to the bookmakers, with the threat of Gambling Commission fines if they get it 'wrong' ensuring a stringent approach is adopted, it is hard to see how that is any different – in fact, if anything, it could be a worse outcome.
As for how often checks will take place, that has yet to be decided.
How do the proposals contrast with the affordability checks already in place and will bookmakers implement the new financial checks immediately?
The Gambling Commission has denied mandating the affordability checks that one in six Racing Post readers reported in February they have been subjected to, which have involved requests for financial documents including payslips, P60s, tax returns and bank statements. That is despite it having told bookmakers to request that information from customers spending more than the national average as recently as 2020.
The white paper suggests that only three per cent of punters would be affected by enhanced checks and only ten per cent of those would be asked for documentation, as a last resort.
The remainder would still be subject to frictionless checks, although the government appears to include open banking in its definition of frictionless, when it actually requires customer consent. And, don't forget, those truly 'frictionless' credit checks are only an aspiration – they currently do not exist.
Law firm CMS believes the argument around whether customers should have to provide sensitive financial information simply to follow their hobby amid concerns about the invasion of privacy has been lost.
It said: "The debate now is merely at what level the checks should be set and how to minimise their intrusiveness."
The publication of the government's thinking does not mean, however, that bookmakers will be able to change their procedures immediately or row back on the checks they have been carrying out.
Gambling Commission executive director Tim Miller said: "The current rules and regulations remain the same until changes have been made as a result of consultation or as a result of a statutory change."
What is a 'single customer view' and what will it mean for punters?
Punters have been suspicious of the concept of the single customer view (SCV), a system which in the Gambling Commission's words would give "a holistic view of a customer’s online gambling behaviour", fearing it would instead lead to more account restrictions and closures.
A trial of the SCV carried out by the gambling industry along with online self-exclusion scheme Gamstop is under way, but it is only focusing on high-risk customers.
The white paper does recognise there have been calls by campaigners for a more "expansive" SCV system, but adds: "Given the privacy implications for the majority who gamble with no ill effect, we do not think the creation of such a system including a national database of all gamblers (even if anonymised) is justified at this time."
Those involved in the trials of the SCV that are taking place insist they do not involve affordability checks.
However, there is undoubtedly some crossover as the white paper does say it is likely there will be interactions between financial checks and the proposed system for sharing data "since financial checks will feed into operators' wider assessment of a customer’s risk of harm".
There is also the intention to expand the system to consider customers who are showing "other indicators of harm".
The government has said that customer data should only be used for harm prevention but suspicions about the motives of the SCV will likely remain for punters, with the Horseracing Bettors Forum saying: "It is essential that the statement 'we will ensure that this data sharing is never used for commercial purposes' is backed up by action. HBF has previously raised serious concerns with the relevant authorities in this area."
The white paper suggests checks by credit reference agencies will be extensively used – could they impact your credit rating and thus ability to borrow money?
Not according to the white paper, which states that the government will ensure that "consumers' financial lives are not impacted through these checks, with credit scores being unaffected".
The first tier of financial risk checks will be similar to the ones already being carried out by operators which do not affect credit scores.
For enhanced checks, much will depend on how a more detailed system would work, something the white paper says the Gambling Commission is working on with the financial services sector.
However, it is not clear how credit checks would not be involved if, as the white paper states, credit reference agencies are expected to provide "an overview of pertinent information for the individual customer". Clarity in this area is clearly vital if punters are not to be put off pursuing their hobby for fear of it affecting their ability to borrow.
Do these checks only apply to online betting or will they be applied in retail and on course too?
The government's plans only cover online gambling, for now.
The white paper states: "The current proposals apply only to the remote sector, but in due course we want to explore the use of frictionless financial risk checks where appropriate in land-based settings to benefit operators and help protect customers."
However, if an operator holds a licence for both land-based and online gambling, the Gambling Commission expects them to share data about customers between the different parts of the business.
Therefore, if a customer has been banned from gambling on an online site, that information should also be shared with that bookmaker's retail operation.
Racing Post readers have reported that they have been subject to requests for financial information when visiting betting shops.
It would seem inevitable there will be further crossover between the two sectors, although how it will be handled remains to be thrashed out.
What will the impact on horseracing be and is the government's estimate realistic?
According to the government, it is estimated that the annual impact of the measures contained within the white paper on racing is between £8.4 million and £14.9m, spread between reduced income from the levy, media rights and sponsorship.
In the immediate aftermath of the white paper's publication, BHA chair Joe Saumarez Smith told reporters that the sport's media rights holders thought those figures "might be a bit of an underestimate".
Media rights income looks to be where the government may have underestimated the impact on racing.
According to the white paper, media rights contribution to racing's income is almost twice that of the levy, but despite that, the white paper claims the measures it contains will affect levy income more heavily – by between £5m and £8m compared to £3m and £6m for media rights.
There is every chance the government has been too optimistic about the negative effect of the white paper on British racing.
As analysts Regulus put it: "Media rights could be impacted by far more than the £3-6m suggested given that they are now largely based on turnover and racing turnover is especially generated by higher-spending customers."
Racing and media rights companies are modelling what the actual impact might be, but are hampered by not knowing how, or indeed if, a truly frictionless solution to financial checks can be found.
Racing's leaders are pushing for the basis of the levy to be changed to a turnover model from gross profits. Will punters face worse terms, such as higher overrounds and the withdrawal of offers, with a turnover-based levy model?
Racing has been calling for this change in part because of the perception issue of the sport benefiting financially from favourites being beaten, but also because they claim it would align racing's interests with those of bookmakers.
Saumarez Smith said recently that a levy based on a rate of one and a half per cent of turnover would bring in an extra £25m for the sport each year.
However, bookmakers have warned that changing the basis of the levy will be felt by customers, pointing to the withdrawal of concessions and changes to the best odds guaranteed offer that have been made already in the face of rising media rights costs.
Seb Butterworth, commercial director at Flutter Entertainment, who leads on the company's racing strategy, told the Racing Post: "Given the rising costs of media rights, if a move from GGR [gross gaming revenue] to turnover results in a further increase in costs to bookmakers, it is highly likely this will impact the customer proposition, with a proportion of that cost being pushed to customers.
"This would mean a reduction in marketing concessions and promotions – those very things being used to drive new and retain existing horseracing customers."
Butterworth added that there would be a "real concern" that moving the levy from GGR to a turnover model alongside media rights would provide a commercial incentive for bookmakers to "monetise" racing – to focus on profit margin rather than thinking about the sport's long-term future.
He added: "This could lead to an acceleration of these costs being pushed back to consumers, as bookmakers try to work out how they can continue to support the sport under ever increasing costs."
Will the proposed gambling ombudsman be involved in resolving betting disputes?
Not in the short term, no. In its advice to the government's review, the Gambling Commission said there should be a new single ombudsman scheme for consumer redress, replacing all the current Alternative Dispute Resolution (ADR) providers such as Ibas – the Independent Betting Adjudication Service – and which would consider all disputes between gambling operators and consumers.
Crucially that would include those disputes relating to gambling harms, an area where there is a gap in the current arrangements.
ADRs such as Ibas are not able to deal with cases of customers seeking the return of money they have lost having suffered gambling harm unfairly as such matters are not covered by an operator's terms and conditions, while the Gambling Commission does not have the power to adjudicate complaints.
However, a new single ombudsman would require primary legislation to become effective and the government has made clear it wants to avoid doing that due to lack of parliamentary time.
So instead the government has called on the industry to create a new ombudsman to only adjudicate complaints relating to social responsibility or gambling harm, a body which it plans to be in operation within a year. ADRs such as Ibas would remain in operation.
Such action would close a gap in the current arrangements but increases the possibility of confusion for customers and between ADR providers.
Lots left to resolve
The white paper may have finally ended speculation about what the government's proposals for gambling reform would focus on, but it raised more questions than it answered.
From the perspective of both punters and horseracing, the plans for financial checks are not as draconian as they could have been given some of the calls by campaigners.
However, there is a lot which still needs to be resolved, not least whether frictionless checks can actually happen in reality.
The months following the white paper's publication will be just as vital as those that came before for punters and for racing.
● Frictionless player protection checks starting with background checks at a £125 net loss within a month or £500 within a year
● A review of the horserace betting levy
● A statutory levy on gambling operators to pay for research, education and treatment of problem gambling
● Extra powers for the Gambling Commission to tackle the black market
● New stake limits for online slots games of between £2 and £15 per spin
● Rules to prevent bonus offers such as free bets harming the vulnerable
● Closure of loopholes to make sure under-18s cannot gamble
● A new industry ombudsman to deal with disputes and rule on redress
Read more here
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