View from the Panel: Effective Consumer Protection

BY GEORGE WHITE, 9TH DECEMBER 2020

WHATEVER else results from the review of the Gambling Act one thing seems certain to be introduced – enhanced protection for those with a gambling disorder.

There is, of course, no dissent from IBAS on that but the obvious issue is how to provide protection for the vulnerable while at the same time respecting the rights and privacy of those who are not afflicted.

It is not an easy matter to resolve and unfortunately IBAS has no magic solution, though we do believe our dispute resolution role does provide an insight into the relationship between operators and customers and the way the current legislation works.

Gambling is a business much different to others. There is no product sold or service provided. It is simply a battle of wits between betting providers and bettors with each trying to get the other’s money. Only one party will ever end their interaction happy.

With online betting now so prevalent, there is also less personal interaction between operators and their customers. Betting has always been an adversarial experience but with the loss of personal relationships there is seemingly much more of a tendency on both sides to indulge in less than scrupulous activity.

VIP SCHEMES AND BONUSES

I would not disagree that VIP schemes had gotten out of hand. When there was a closer relationship between bookmakers and their customers and customer bases were smaller it was different. The bookmaker would know what a customer could afford to lose and gained nothing if his client was tapped out.

VIP schemes of that era were mainly to keep customers from moving to rival layers rather than to incentivise them into gambling more, seemingly the object of some recent VIP programmes.

The same criticism can be made of bonus offers. The wagering requirements are usually around 35 times the bonus and inevitably lead to customers spending extended periods trying to fulfill them, presumably not something conducive to responsible gambling.

The Panel also wonder whether the various bonus schemes are cost-effective for operators. We are aware that for operators they are the most productive way to acquire new customers but it also appears that few of those customers use their accounts other than for availing themselves of the bonus offer.

There is also a cottage industry of ‘bonus harvesters’ opening multiple third party accounts to take advantage of bonus offers, including several organisations making a business out of it. That in turn requires operators to invest in security departments and anti-fraud software.

IDENTITY CHECKS

The Panel see a large number of cases where the dispute centres on the identity of the customer and whether there are links between the disputed account and other accounts.

Many customers argue that the Gambling Commission’s Licence Conditions (LCCP) require those checks to be made when an account is opened and that therefore an operator is not entitled to make further checks during the life of an account or when a withdrawal is requested.

However, the wording of the LCCP is that operators are not entitled to delay or withhold a withdrawal if the identity checks being made could have been done when the account was being opened. Obviously identity issues arising from the use of an account cannot be detected at account-opening and the Panel understand therefore why operators make further checks at withdrawal, though it is also clear that some operators could do more to verify accounts when they are opened.

The problem is that these identity investigations have to be done manually and inevitably take time and investment in both human and software resources. As the majority of accounts being opened are legitimate then from an operator point of view close scrutiny of every account is not cost-effective, particularly as a prolonged delay in the opening of an account is likely to deter new customers from doing so.

EFFECTIVE - AND FAIR - SELF-EXCLUSION SCHEMES

Identity issues are also central to the cases we deal with where someone has previously self-excluded or registered with GamStop but then opened an account with different personal details.

To do so is, of course, a breach by the customer of both the LCCP and GamStop’s terms and conditions. Some of the cases involve a customer who has lost claiming the return of deposits on the grounds that the operator should have detected the previous self-exclusion or GamStop registration even though they used different personal details while others are where a customer claims the payment of winnings denied to them on the grounds that they placed the bets in good faith

The Panel are aware that the House of Lords report took the view that winnings should stand and losses be refunded in these situations but our collective view is that all transactions – win or lose – should be void as the ability to win would only cause those exploiting the situation to try again. IBAS has recommended to the Gambling Commission that a consistent, industry-wide approach is implemented.

And, of course, what no one can know without further investigation is whether the bypassing of the required procedures was a desperate attempt by someone with a gambling disorder to chase their losses or a cynical attempt by a ‘freerider’ to game the system.

PARALLEL CHECKS AT ACCOUNT OPENING AND SELF-EXCLUSION

As far as I can see the only way to reduce the number of these self-exclusion disputes would be to make a GamStop registration the only way to self-exclude and to make GamStop registration itself much more rigorous with all those signing up to it having to prove their identity.

At the moment GamStop relies on those using it being committed to wanting to stop gambling but the problem is that it is all too easy to bypass a registration by using a different household address (or even a different form of it), a different email address or a different spelling of their first and last names.

The electronic verifications carried out by most operators when an account is opened usually fail in those situations and it is only subsequent manual checks which can spot similarities as opposed to matches.

Of course, in itself a rigorous GamStop registration process would not prevent all of these cases as the Panel have seen enough identity disputes to realise that those trying to conceal their identity will go to considerable lengths to do so. The essence of gambling is gaining an edge and unfortunately there is a minority of customers who will exploit any practice, fair or foul, which could bring them a profit.

I also cannot see how affordability checks will work without some form of central registration body similar to GamStop monitoring them. There is a world of difference between a deposit limit of, say, £500 per month for one account and the same limit being applied for 10 or 20 accounts.

I have little doubt that if there was no monitoring across all a customer’s accounts then all that would happen is that customers would open accounts with multiple operators or open more than one account with the same bookmaker. That is what happens now when winning customers have their stakes factored.

There would also need to be an industry-wide monitoring of account activity as there would be no logic to restricting deposits on one account when a customer was showing a profit on other accounts.

It also has to be recognised that gambling only becomes a disorder when someone loses and starts to chase their losses. It is simply not possible to impose checks and balances only on those with a problem. They have to be applied to all those who open and use an account with a gambling operator.

The only conclusion I can reach is that if self-exclusion is to be more effective then GamStop has to establish each registrant’s identity itself. Similarly we cannot see how affordability checks can be effective without there being an ability to monitor spending across all of a customer’s accounts.

GAMBLING CONSUMER REGISTRATION?

The consequence would seem to be for the industry or the Gambling Commission to introduce some form of central registration or licensing process for customers. From the cases the Panel regularly see it is clear that the technology is there to track customers, particularly if customers had to register a device with that central body.

Once the registration process is completed (including affordability checks and source of funds) then the customer would be given a personal code and only by submitting that code would they be able to open an account or place a cash bet.

The practical advantage for both operators and customers would be that the identity and affordability checks would be done once rather than each time an account was opened with a new operator.

The critical question, of course, is whether the protection of the vulnerable justifies the introduction of such a scheme which would inevitably mean greater scrutiny and restrictions on those who are not.

Indeed I could see such a scheme having a negative impact on people betting affordably, the gambling industry and greyhound and horse racing. The latter, of course, gets much of its funding from the levy on horse-racing bets.

An alternative to an industry or operator affordability scheme could be for customers to be required to establish a ‘Monthly Net Gambling Spend’ with their bank or funding source if they are using an eWallet. An operator could only open an account once that agreement and its figure was confirmed to them, preferably electronically by the bank.

Initially customers might not be keen to do that for fear of damaging their standing with their bank but the bank will already have a record of the gambling transactions and it would seem preferable to revealing their financial history to a gambling operator or other third party.

HOW ARE WE DOING?

Total Value of Payments Awarded or Conceded to Customers in 2019.
£634,426
Total Requests for Adjudication.
6,282

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