Affordability! A Warning To US Online Gambling From Europe

In the current frenzy surrounding the regulation of sports betting and online gambling in the US, it’s sometimes easy to forget the industry in the rest of the world isn’t quite enjoying the free-flowing champagne apparently giving the US online gambling sector the giggles right now.

It may only be December, yet a look at the developments in the oversight of online betting in the UK has the distinct feel of the Ides of March about it.

No more so than in the UK. Indeed, it is surely no coincidence that as the UK regulatory net (some might say noose) is tightening, the most prominent listed players are much more focused on US opportunities.

And with their combined attention elsewhere, their backyard is merrily burning.

Affordability is the Name of the Game

The latest news on what looks to be an ongoing conflagration came in November when the UK Gambling Commission issued a consultation document discussing its options on affordability tests.

Affordability, in this instance, would mean spending caps on players. The Commission appears to favor caps of £100 a month or $132, based on the consultation documents.

“Catastrophic is no overstatement,” said Dan Waugh, a regulatory analyst at gambling consultancy Regulus Partners of the consultation documents proposals.

A Primer on Affordability Limits

The UK is not alone in seeking ways to limit how much consumers spend on online gambling. As Waugh points out, the setting of mandatory deposit limits has come to the fore in various European countries.

• Spain: Deposit limits of €600 per day, €1,500 per week, or €3,000 per calendar month per operator
• Belgium: Customer account limits of €500 per week and €2,166 per month
• Sweden: Similar limits to Belgium but only with gaming
• Finland: Reduced a €2,000 per month limit for gambling products to €500 for the duration of the pandemic
• Germany: Set to introduce a €1,000 per month deposit limit as its lowest tier with extra due diligence required to go above that level.

But the UK will be “breaking new ground” and not in a good way, with the limits mentioned in the consultation, says Waugh.

At £100, Regulus estimates that nearly 2 million people would be “captured” by the spending limit and would find themselves having to prove that they can afford to lose more than that.

The enhanced checks would include pay stubs, tax returns, and bank statements.

As Waugh says, “the invasion of privacy is staggering” and would likely lead to individuals going to some lengths to avoid the level of intrusion that would be needed to enforce the rules.

“Putting it mildly, the implicit levels of customer avoidance of such onerous requirements would make Greek tax authorities blush,” he said. “Further, it would be hard to see this avoidance as particularly ‘wrong’ – in the way that drunk driving or taking illegal drugs is ‘wrong’ – (thus) further undermining compliance.”

Change for the Worse

Hitting a similar note of criticism, a recent blog from the specialist gaming team at London law firm Wiggin noted the changes presaged in the consultation are a level of change that the industry and the consumer are “simply unprepared for.”

The crux of the issue, for the Wiggin team, is proportionality. That is, to minimize problem gambling, what sacrifices in terms of freedom to bet should the rest suffer.

Say the Wiggin team: “How far does the Commission expect the behavior of not only operators, but also millions of regular and not-at-risk customers which constitute the vast majority of British gamblers to change in order to mitigate the risk that a small, yet vulnerable proportion of customers face?”

The likely end result of this vast extension of official oversight would, according to Waugh, be threefold.

First, players would seek to limit their exposure to any one operator by spreading their cash around multiple accounts – at least until the Commission’s hopes of a single customer view come to fruition.

Second, it is possible people will resort to proxy accounts with friends and family.

And last – and a familiar response as far as the US is concerned – a significant proportion of customers are likely to find a home offshore.

According to Wiggin, a final potential outcome is possible – mass-market gamblers will reduce their spending or stop gambling altogether. “There are commentators, particularly with a public health interest, who see any reduction in gambling, per se, as an objective to aim for,” they add.

It is a bleak picture. All this comes ahead of the planned government review. Should both the consultation and the review confirm the trend towards even more restrictions, the US gaming scene can expect to see more refugees from the European sector washing up on American shores, telling stark warnings of regulatory overreach.

To butcher the Sinclair Lewis novel, it can happen here.