No topic has been more polarizing to the gambling industry than the proposed financial risk checks. Now that dates have been set for roll-out, we examine all the fuss is about.

Financial risk checks, formerly known as affordability checks in the UK, were essentially designed to protect players from gambling online with money they cannot afford to lose. Operators conduct them to ensure they are not encouraging problem gambling, and that their products and services are being used responsibly.

Similar in concept to the ability-to-pay checks conducted by financial service providers of credit cards and loans, financial risk checks run in the background, ultimately satisfying the operator that the gambler has sufficient funds to continue placing bets safely.

The release of the UK Gambling White Paper in April 2023, which aimed to bring the regulatory environment into the digital age, caused uproar among gambling operators and players alike. Its proposal on affordability checks, in particular, led to collective apprehension that they would be intrusive and impact the enjoyment of gamblers who were not experiencing gambling-related issues.

The UK Gambling Commission (UKGC), which is currently running a series of consultations on proposed changes, has identified three key risks it wishes to address via financial risk checks: binge gambling, financially vulnerable customers, and sustained significant losses over time (from gambling). To assuage operator and player fear, the UKGC has stated that “frictionless” player protection checks will only ever be conducted, starting with background checks at a £125 net loss per month or £500 within a year.

Summer consultation ends. Now what?

In February 2024, in a blog published on its site, the Commission shared info on the next steps for financial risk checks, including some of the changes it would implement, following the consultation.

The so-called ‘frictionless, light touch checks’ will focus solely on publicly available data, and not, as originally suggested, require gambling operators to factor in an individual’s personal details, such as postcode and job title.

Enhanced financial risk assessment, which are triggered by unusually high loss levels, will be reliant on credit reference data. Following consultation feedback, enhanced financial risk assessments will be rolled out on a trial basis with a selection of operators to test how data-sharing would work in practice. The pilot will run for 4-6 months.

“At the Commission we completely understand why there has been such interest in financial risk checks. But it should be remembered that protecting people who are vulnerable, while still affording the freedom of others to gamble safely, is complex and there is no single solution,” said Executive Director of Research and Policy at Gambling Commission, Tim Miller.

Privacy concerns and data protection objections.

The topic of responsible gambling and safer gambling has been on the UKGC’s agenda since as far back as 2018, when it launched a proposal for operators to establish limits on online consumer expenditures until affordability checks were carried out.

In November 2020, a month before the government announced it would be carrying out a gambling review, the UKGC launched a consultation that included a call for evidence on the thresholds for affordability checks. During that period, a net monthly loss of £100 was proposed as the lowest possible threshold to prompt an affordability check, after which a gambler would be required to prove they had sufficient funds and could afford to continue gambling on the platform.

The consultation caused alarm throughout various gambling sectors, especially the racing administration. The fear is that thousands of gamblers would be uncomfortable divulging such private information and choose to bet via black-market routes or give up.

The debate surrounding affordability checks highlighted the tension between safeguarding vulnerable gamblers and preserving individual freedom and privacy.

Towards the end of 2022, reports suggested that the government favored “non-intrustive” procedures similar to a credit check in financial services, although the matter was likely to be subject to further consultation.

Ready, set, stop: Impact of affordability checks.

The proposal of affordability checks was and is still by far the most controversial of gambling reforms under discussion. Critics argue that affordability checks come with notable drawbacks. For instance, the British Horseracing Authority warned Members of Parliament that introducing affordability checks at low levels of spending may prove financially devastating for the British horse racing industry.

Establishing appropriate spending limits has long been considered a challenging aspect when it comes to conducting affordability checks. Many factors need to be considered, including customer income, expenses, and overall financial situation.

In early 2021, Several high-profile names working within the racing industry sent letters to Members of Parliament, underscoring that racecourse revenues had suffered a £250 million loss due to the pandemic. Their argument was that if affordability checks as low as £100 were established, it would result in a potential further impact of £60 million per year on profits from lost levy, as well as media rights payments.

Other evaluations proposed that the potential damage would be as high as £100 million per year, with roughly 60% of gamblers likely to reject such requests for information.

Most recent criticisms of financial risk checks.

Although the UK gambling white paper appears more balanced than many in the industry feared, there are criticisms from the industry based on allegations of intrusiveness and paternalism.

“The invasion of privacy is staggering,” opined Regulus Partners regulatory analyst Dan Waugh in 2020 regarding the concept of financial risks and would just lead to individuals looking for ways to avoid the level of intrusion needed to enforce the rules.

With financial risk checks, the UK’s government proposes “frictionless” and “unintrusive” checks when a player passes a net loss of £125 per month or £500 in a year. As per the proposal, such affordability checks would become more detailed yet “still frictionless” at more substantial loss levels, i.e., £1000 in a day or £2000 within 90 days. Such levels would be halved for gamblers under 25.

As per the UKGC’s consultations on four initial topics (financial risk checks; remote game design; in-person age verification; customer control over marketing), numerous operators have completed compliance assessments on how the proposed standards on affordability and financial risk checks has been met.

According to a survey conducted by YouGov on behalf of the Online Betting Guide, 65% of players showed a lack of willingness to comply with affordability checks. Another study led by the EY for the Betting and Gaming Council towards the end of 2022 showed that nearly 70% of people who gamble would resist allowing regulated companies to conduct affordability checks to determine whether they could afford to bet.

An industry “simply unprepared.”

A 2020 blog from Wiggin, a law firm based in London, also noted how unprepared the industry and consumers were to adapt to the requirements of financial risk checks. The main crux of the issue for the Wiggin team was proportionality.

A question posed in the blog was: “How far does the Commission expect operators and regular customers, which constitute the vast majority of British gamblers, to change their behavior to mitigate the risk that only a small yet vulnerable proportion of customers face?”

What consequences do critics most fear?

According to Waugh, the likely outcome of extending “official oversight,” via financial risk checks, would be “threefold.”

Rather than use one operator, players would just allocate funds throughout multiple accounts, until the UKGC’s aspirations toward a single customer view are fully realized
Gamblers may use proxy accounts owned by family and friends
Players may resort to offshore gambling or black-market gambling platforms

As mentioned earlier, the final outcome would be players to simply reduce expenditures or stopping gambling altogether.

A study led by EY for the Betting and Gaming Council highlighted the decline of online gross gambling yield since mid-2021, owing to several possible factors, including the introduction of affordability checks.

For a deep dive into the compliance challenges facing global operators, including analysis of some interesting regional differences, read our ‘Exploring the gambling industry’s top compliance challenges in 2024 and beyond’ blog.

Challenges in Compliance Survey

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6 financial risk check indicators, 1 frictionless check.

IDnow combines a robust, holistic affordability check with multi-dimensional ID verification and fraud prevention, facilitating seamless gambling experiences anytime, anywhere, all from one platform, all in real-time.

We offer the industry’s most comprehensive affordability check (read more: Why 6 financial risk check indicators are better than 2.’) to enable seamless gameplay by offering a fully automated journey and enhanced speed and accuracy at the affordability checkpoint. Checks can be added at any point in the journey. For example, while the more cautious operators may wish to implement the full suite of checks at the point of onboarding, some may wish to implement them at the point of withdrawal or deposit or once thresholds are met. Checks from our suite of financial risk indicators can also be done at different points – e.g. Geo, mortality and property at account sign up and application, and vulnerability and derogatory checks once the whitepaper limits have been reached for example.

IDnow values the importance of non-intrusive affordability checks as they indicate that operators take player protection, privacy, and responsible gambling seriously.

Worth the risk? Arguments against affordability checks in gambling. 1