Report
Exploring gambler attitudes towards Financial Vulnerability and Financial Risk Check proposals
The Gambling Commission’s report on the attitudes and opinions of online gamblers regarding the proposals for financial vulnerability and financial risk checks.
4 - Financial risk assessments
A standard approach for providers to conduct a financial risk assessment for a customer who has lost an unusually high amount over a short period, or over a sustained period, and to inform the action that might take place as a result.
This assessment would occur when a customer’s net loss is more than:
- £1000 in a rolling 24 hour period
- £2000 in a rolling 90-day period.
‘Net loss’ would take into account the preceding position of a customer immediately
- 7 days before the 24 hour period or 90 days before the 90-day period
- gambling may continue on your account, but depositing additional funds are halted.
These assessments would be informed by credit reference data such as a credit check, but this kind of check will not leave a trace or impact your credit score.
Once a check has been completed, it will be valid for the next 6 months and not need to be repeated unless thresholds were crossed again after the 6 months.
What happens following an assessment?
The assessment findings would form part of an operator's risk assessment alongside other known information, including the customer's gambling patterns.
In many cases no risk is identified, and nothing happens at all.
If there are risk flags, the operator might contact you to discuss and encourage you to set a limit, or if there are serious risk flags, they might set a deposit limit.
Taking into account previous winnings
‘Net loss’ may also take into account the position of a customer in a time period immediately before the relevant time period:
- 7 days before the 24 hour period
- or 90 days before the 90-day period.
Example
A customer places £400 on online slots and wins £5,000 (including initial stake). A few days later, the Cheltenham Festival begins, where they stake and lose a £1,000 during a 24 hour period.
Although in that 24 hour period the net loss is £1,000, the customer still has a net positive position of £3,600 over the week, and this would not therefore trigger a financial risk assessment.
However, if the customer had won £5000 more than 7 days before the Cheltenham festival, the previous winnings would not be taken into account and their £1000 loss would have triggered a financial assessment.
What does an assessment involve?
To conduct a financial risk assessment, gambling operators must gather data, or a risk assessment from a credit-reference provider, for example Experian, which includes:
- credit performance data
- income and expenditure data (including current account turnover data).
This kind of check will not impact your credit score.
If the above is not possible (it would be in over 90 percent of cases), gambling operators must gather information about the customer’s income and expenditure to help support their understanding of financial risk. This will be done through:
- open banking
- or information directly requested from and provided by the customer.
How can operators use your data?
Gambling operators must be transparent and inform all customers that they will gather information from third parties to support their understanding of financial risk.
Gambling operators must only use data obtained for financial risk assessments to evaluate the risk to the customer and decide what action to take – it must not be used for any other purpose, for example targeted marketing.
Your gambling data would not be shared with credit reference agencies or financial sector organisations, such as your bank.
Scenario 1
John receives an offer for free spins on a particular game from his favourite online gambling account. That evening, he deposits £50 to qualify for the offer. John spends an hour playing slots at 50p per spin, sometimes winning small amounts. Eventually his balance decreases to £0.
Having enjoyed the feeling of winning, John deposits a further £100 to play a familiar game. After 3 sizeable wins, his balance is £1200. Feeling confident of a really big win, John increases his stake to £5 per spin and despite occasional successes, has soon reduced his balance to £0 again. Chasing his losses, John deposits a further £250, which he loses.
Switching games, he deposits £700 and loses a further £600 that evening which triggers the £1000 threshold in a 24 hour period. John’s gambling operator requests a risk assessment from a credit-reference provider. John can continue gambling on his account but is not able to deposit any more funds until the assessment is complete.
It turns out John’s assessment is fine and he can resume as normal, he will not have to have another check unless he reaches the thresholds again after 6 months have passed.
Scenario 2
Pete loves the races and when he cannot go to an event in person, he follows along online and places bets through his favourite online gambling provider. He is used to riding ups and downs, but recently his losses are outweighing his wins most weeks, and he is gradually depositing and losing more and more. Trying to get back up, he ends up losing over £2000 in 2 months.
Because he lost over £2000 in a 90-day period, Pete’s online gambling provider has been triggered to conduct a financial risk assessment. Pete’s gambling operator requests a risk assessment from a credit-reference provider. Pete is able to continue gambling on his account, but is not able to deposit any more funds until the assessment is complete.
Turns out Pete’s assessment is fine, and he can resume as normal, he will not have to have another check unless he reaches the thresholds again after 6 months have passed.
Binge gambling
The following example details an occasion where current practices and/or regulation has missed identifying a customer who was at risk through binge gambling:
A customer lost £36,000 in 4 days without appropriate financial risk assessment being carried out.
This is above the disposable income the Office for National Statistics estimates was available to the median household for an entire year in 2021 (£31,400).
As such, the rate and level of spending would have been unaffordable for most UK households, and likely to indicate harm.
Significant unaffordable losses over time
An example of where current practices and/or regulation has missed identifying a customer who was at risk from significant unaffordable losses over time:
A customer lost approximately £33,000 in 3 months without the operator carrying out any financial risk assessment.
Compliance staff subsequently examined the information held by the operator on this customer, which suggested they had an annual income of £8,500.
This suggests that, if the operator had assessed the customer’s financial circumstances earlier and more effectively, they could have acted to reduce the extent of financial harm suffered.
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Financial risk assessments: Thresholds for young adults
Last updated: 1 May 2024
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