Balancing risk and opportunity to survive
The past ten years have seen our industry undergo a remarkable transformation; turning it into a global billion pound industry that’s not only still growing, but is facing ever more intense scrutiny from media and regulators alike.
As I’m sure you’re all aware, in the UK the industry is facing a Competition and Markets Authority (CMA) investigation due to allegations that some companies have been using ‘unfair and complex conditions’ to prevent players from collecting their winnings.
Some of these ‘conditions’ happen to be mandatory AML procedures, over which operators have little control,, but a few aspects also relate to responsible gambling procedures. One example is a player winning £35,000 who had self-excluded on a sister site, and so was of course denied when he tried to collect the winnings. Despite his claims that it was only done in order to close a previous account, there should be no issues with blocking a player that had self-identified as a problem gambler.
If we’re honest with ourselves however, he should have never been allowed to play in the first place.. Implementing the necessary checks from first deposit and communicating any potential issues upfront would not only avoid stories such as this, it would act to minimise fraud and risk, and ensure the maximum possible protection for players. Not only that, it allows companies to highlight potential VIPs from the moment they start playing and to monitor their behaviour to make the most of their interactions.
It’s also not unknown for a regulator to assume that an individual highlighted as a problem gambler is actually a VIP that they operator is attempting to hide. How can we expect those outside of our industry to trust us if we can’t trust each other?
Let’s start sharing. If you attended any of the recent industry events like EIG and the Big Africa summit you’ll have noticed the panel conversations were centred on responsible gambling, the use of data, and the technology that enables it all to join up. All involve sharing and pooling resources, combining strategy to deliver a solution – yet at the moment they’re all siloed to individual companies or service providers. We need to go further.
We’ve seen it done successfully in financial services and motor insurance - everybody wins, and if we did it would allow the sector to deliver trust on a broad scale. Trust for the regulators that the various projects we’re undertaking are meaningful and encompass a wide enough scope; trust for the operators that the results are accurate, specific, and relevant to the sector, and trust for customers that what is being delivered to protect them is not just a soft touch for an industry trying to avoid regulation. Building trust in the only way we’ll achieve long term confidence in our sector.
Aside from both the widespread benefits of taking this kind of proactive action, the fact is we simply can’t afford these kinds of scandals. The CMA investigation could result in enforcement actions and prosecutions, and is eerily reminiscent of the investigations the financial services industry underwent before the FCA took over regulation in 2013. The compliance obligations of both industries are similar and mean that it may well provide a window into the regulatory changes that are yet to come – and in the case of businesses that fail to comply, it’s a very ominous picture indeed. Following its high profile crackdown the FCA has issued a grand total of £2.8 Billion worth of fines, and has seen over 100 firms close their doors in the consumer credit sector alone. Before you dismiss numbers this big, remember that the UK Gambling Commission has already suggested a tax of up to £11m for UK licence holders if they don’t a find meaningful way of addressing responsible gambling.
Best avoided, I’m sure you agree.