Britain’s gambling regulator remains very confident that it can use Open Banking technology to solve the country’s long-running debate around betting affordability.
The UK gaming sector has seen extensive regulatory deliberations and changes over recent years. The review of the 2005 Gambling Act, which took around two-and-half-years and the conclusion of which has still not been fully implemented, is the arguable pinnacle of this.
Central to this review and the discourse around it has been an often-heated discussion around affordability – this being how betting operators can ensure customers are gambling within their means.
The Gambling Act review’s solution to this is ‘financial risk checks’, a moniker given to the notion of an ‘affordability check’. Open Banking will be central to these checks, facilitating data sharing between customers, betting operators and third party providers to assess whether a punter is financially vulnerable before they place a bet.
Speaking at the International Association of Gaming Regulators (IAGR) Conference on 21 October 2024, Andrew Rhodes, CEO of the UKGC, asserted that the regulator and industry are ‘making strides in the use of Open Banking data’ and that Open Banking is a ‘pillar of its data transformation programme’.
“We recently ran a successful pilot to see if we could make use of Open Banking data to help us understand gambling customers, operators, and the market,” he continued.
“This dataset comprises thousands of individuals’ anonymised banking transaction data, which we are using to understand gambling in Great Britain from perspectives that we have not seen before.”
The UKGC’s Open Banking expectations
Under the initial White Paper proposals, checks will begin at a net loss of £125 within a month or £500 within a year, higher spending thresholds will stand at £1,000 a day and £2,000 a month, with stricter benchmarks for 18-24-year-old customers.
In the event customers have to provide evidence of financial sustainability to gamble, they will be asked to do so via a third party Open Banking provider under UKGC/DCMS plans.
Open Banking plays another role in the UKGC’s vision, however. The regulator also wants to leverage the data gathered via Open Banking to gain a better overall picture of customers and their spending habits.
“Let us have a look at some of the ways we have been using the data, first looking at the perspective of individuals,’ Rhodes said.
“We can see when people make deposits and withdrawals to gambling operators. This gives us a good proxy for gambling spend over time, though we can not directly see spending activity within their accounts.
“This plot shows the net deposits for three of the most active gamblers at a single operator in the first six months of 2023. The line goes up when they make a withdrawal, down when they make a deposit.”
The UKGC envisions Open Banking playing a major role in informing its Single Customer View (SCV) idea, a holistic view of a customer’s online gambling behaviour which the regulator hopes will rescue gambling homes.
Rhodes also explained at last week’s conference that Open Banking can provide the regulator with a better view of the UK betting market as a whole.
“The Open Banking data enables us to explore which operators have similar groups of customers,” he added. “By looking at which companies that multi-operator gamblers spend money with, we can say whether any two operators in the market share a high proportion of their customers.”
However, the regulator does have one additional factor to consider – will customers actually be open to Open Banking?
The UK has seen increased adoption of Open Banking in recent years, that much is true. Data from providers like Trustly show that Open Banking is being utilised by UK consumers for purposes like paying tax, with usage rising year-over-year.
The issue is that many customers are concerned about their data. Repeated instances of cyber and data breaches, cases of major tech firms selling data to third parties, and illicit use of personal information, have made some consumers wary of sharing their data.
Regulators and operators may have a tough job on their hands in persuading betting customers to adopt Open Banking – a view expressed by some of the panellists at the Payment Expert Summit last month.
Whilst the UKGC clearly has a well thought out vision for how Open Banking can change responsible gambling in the UK for the better, the process will not be a straightforward one.
