TransUnion’s Declan Raines on the challenges of identifying financial strain during inflation 

credit: Shutterstock
credit: Shutterstock

Writing for SBCAmericas, TransUnion’s Head of US Gaming Declan Raines talked about how to better identify customers who may be enduring a challenging time financially.

It comes amid a backdrop of rising inflation, with a report from the Consumer Price Index indicating prices are up 8.3% year-over-year. That rise resulted in a stock nosedive that was the worst day in the past two years.

Furthermore, a recent survey from TransUnion found more than half of the bettors surveyed made at least $100,000 a year. However, 75% of sports bettors earning six figures are still concerned about paying all of their bills. Credit card payments remain a big concern for bettors as well. 

“From our perspective, we come at it more from the lens of what other context is there with this consumer beyond the fact that they’re depositing with a credit card that may give you some kind of signal that there is resilience or distress,” stated Raines. 

“If I’m depositing with a credit card, and it’s the fourth credit card that I logged onto the site, if there’s other information, maybe I have got a bankruptcy on my associated with my identity, you’re starting to build a picture of context around whether this is something that you should be permitting for a certain consumer. We look beyond just payment method. 

“What other information can you look at regarding a consumer and transaction to either identify distress or resilience?”

US bettors want a balance between ease of use and protection

Raines also noted that payment options for online betting are always about striking a balance between ease of use and customer protection. In some jurisdictions like the UK operators will go as far as asking to see a patron’s bank account information before taking them on as a customer. The US does not allow such things as the release of credit scores to sportsbooks and online casinos. Even if this was an option, Raines admitted this is probably not something most consumers would be okay with.

“If you knew when you signed up to DraftKings they were doing some kind of credit assessment or credit check on you, you might think that’s a little bit much for somebody who’s trying to place a $50 bet. So there’s definitely a balance to be struck between what consumers are comfortable providing to operators, what information can help operators make more informed decisions, and then finding that balance between those two different elements”

There are plenty of other ways to conduct affordability checks beyond a person’s credit score. Address stability, recent bankruptcies, and how many credit cards a person has opened are all helpful indicators. Raines cautioned that this can’t be done in a vacuum. Someone could move several times in a short period and be completely solvent. So the affordability check is about taking all of these factors into consideration. 

Expanding beyond having the money at the moment, TransUnion, like the rest of the gaming industry, is also paying more attention to resiliency. The US online gambling industry is old enough that the discussion is shifting from acquisition to retention. With that comes an increased interest in customers who are financially stable enough to maintain sports betting as a hobby and not just deposit once, lose, and never return. Throw in the historic economic headwinds and resilience becomes a major consideration.

For operators, that means looking beyond first-party data for answers. Operators can identify chasing behavior with their own information. For example, if a bettor is using several different credit cards to deposit, that might be a sign of problem gambling and chasing losses. A bettor can mask that behavior if they use their shared wallet at several different operators, so using third-party data can help paint a clearer picture of a situation.

Unbanked customers, crypto, and investing are the new frontier

What do you do when there isn’t much information to work with though? A Federal Reserve study from 2019 indicated that 22% of American adults were either unbanked or underbanked. Sportsbooks have come up with creative solutions to help those customers deposit on sites, but determining that customer base’s affordability involves a different set of factors.

“You have public information. That’s things like bankruptcies, liens, electoral roll information, what type of area you live in, things like that. So there’s a lot of different data out there that is available beyond just credit where you can try and plug a gap on your information or on a consumer,” Raines said. “It even goes down to the device as well. Seeing what type of device is this? Is this the latest iPhone or is this a jailbroken older iPhone that may be indicative of fraud in our core business? So there are a lot of different data sets that we invest in and credit as a piece of that but not the only data source that we have.”

TransUnion continues to develop new approaches as an increasing number of people choose financial options beyond bank accounts and credit cards. Cryptocurrency remains on the fringes of gambling, but with new direction from the Biden administration that could change. TransUnion is already looking at both crypto and financial investing apps like Robin Hood, but Raines said insights and takeaways from those industries are still probably a year away.

What the next year may hold for Americans when it comes to inflation, employment, and the expansion of gambling is not clear at all. With something concrete like data though, operators and the gambling industry can start adapting and preparing for 2023.