Gambling review

Affordability checks: what your MP needs to know ahead of the big debate on February 26

Millions of people bet on horseracing every year. For some that is the annual flutter on the Grand National or Derby, but for many others, including tens of thousands of regular Racing Post readers, betting is a weekly or daily hobby, in which a deep knowledge of and passion for the sport makes it a skill-based punt.

As a result, British racing has a symbiotic relationship with the betting industry. Every year bookmakers provide around £350 million to the sport's finances through media rights payments, the horserace betting levy and through sponsorship and advertising.

That contribution helps support 59 racecourses, more than 500 trainers caring for more than 18,000 thoroughbreds and 85,000 jobs, many in the rural economy.

British racing is a jewel in the country's sporting crown and a world leader in its field, but it is under mounting pressure as intrusive affordability checks on bettors hit funding and drive fans away from the sport.

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What are affordability checks?

Affordability checks in betting are similar to those carried out by mortgage lenders and are designed to ensure those betting are able to afford their level of spend. Uniquely, however, in no other sphere are checks applied to those seeking to spend their own money, as opposed to borrowing.

Checks were first introduced in 2021 after the Gambling Commission mandated that bookmakers must assess customer affordability, but became government policy only last April when the gambling white paper set out proposals for what it termed financial risk checks.

These are structured in two tiers, with the first check kicking in at a net spend of just £125 over 30 days or £500 in a year, equivalent to spending £1.37 a day, less than half the price of a typical high street coffee. This would assess open source information, such as whether a customer had been declared bankrupt, but could also involve bookmakers using postcodes, job titles and average salary data to assess whether customers can continue betting.

A second enhanced 'financial risk' assessment would occur if a punter ran up a net loss of £1,000 in 24 hours or £2,000 within 90 days, and would entail more detailed checks of a customer's finances, including current account turnover. The government says these checks should be 'frictionless', but it is unclear how the required information can be obtained without asking customers to submit personal financial information.

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The effect of checks on British racing's finances

The government has acknowledged these checks will impact the economic health of British racing. It has estimated they could reduce the sport's income by £8.4m to £14.9m per year as a result of customers being prevented from betting on the sport, either because they 'fail' an affordability check or refuse to provide the required information.

However, this assessment is almost certainly a major underestimate, the result of shoddy calculations and a poor understanding of racing's funding model by DCMS, which has tacitly acknowledged that fact by committing to a review of the impact assessment.

Calculations made by British racing estimate the true financial impact of affordability checks to be nearer £50m per annum. That is equivalent to more than 25 per cent of the total prize-money available to racing's participants per year.

The impact checks are already having

Affordability checks only became government policy with the publication of the white paper and have yet to be formally introduced, but bookmakers, acting under Gambling Commission guidance, have been carrying out financial checks on customers for three years now.

This has already had a significant impact on racing's funding. The sport claims more than £1 billion of online betting turnover on the sport has been lost since 2021, while the Gambling Commission's own statistics for 2022-23 showed a year-on-year drop of £900m in betting turnover on racing.

This affects the sport's ability to invest in facilities and return money to participants and owners via prize-money, meaning British racing is falling further behind its international rivals.

What customers think

Affordability checks are deeply unpopular with racing bettors. In a Racing Post survey of more than 9,000 bettors conducted early last year, 97 per cent said they – rather than the government, their bookmaker or a regulator – were best placed to assess whether their betting was affordable.

Later in the year 14,465 people responded to a survey organised by the BHA. Of those, 52 per cent (of more than 13,000 who answered the question) said they would bet significantly less, or not at all, on British racing if affordability checks came in.

The results also showed that more than one in four bettors had already been subjected to affordability checks and, of that number, 63 per cent refused to comply and either stopped betting or moved on to another bookmaker.

Nearly one in ten had used non-regulated black market betting sites while four in ten respondents were prepared to switch to the black market if faced with stringent affordability checks.

In November, a petition against affordability checks hit 100,000 signatures in less than a month, prompting the parliamentary debate that will take place on February 26.

Read these next:

British government's affordability checks plan rejected by racing's participants and fans after petition passes 100,000 signatures

More than half of punters prepared to bet significantly less or walk away from racing over affordability checks, survey reveals

British racing set for £250m hit over five years because of affordability checks, warn leading industry figures

The Big Punting Survey: one in six have already been hit with affordability checks

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Bill BarberIndustry editor

Published on 29 January 2024inGambling review

Last updated 18:30, 29 January 2024