New Rules For Betting VIP Schemes To Come In On 31st October
The discussion around the VIP schemes offered by bookmakers and casinos has been the subject of intense debate over the last year with several independent and parliamentary bodies suggesting these should be banned or severely curbed. The main issue with these exclusive programs for higher stakes players is it tends to attract or create more problem gambling. VIP players are also more likely to use fraudulent, stolen or illegitimate funds.
Several companies have been fined of late for not appropriately monitoring VIP players. Betway were fined £11.6M in March this year for failing to protect customers with one of the main reasons being accepting stolen money from VIP customers.
Betting companies were also critisied when it came to light that they were involved in reviewing the impact of VIP programs, which many cited as them ‘marking their own homework‘. Around 80% of deposits to brands come from just 2% of customers, most of which are VIP members, creating an obvious bias for gambling companies that means it is highly unlikely they can self-regulate in this area.
New rules around VIP schemes are expected as part of a new gambling act due in 2021. The UKGC has however just released a set of new rules to stamp out irresponsible VIP customer practices following an extensive consultation.
What Are The New VIP Rules?
On the 31st October 2020 UK licensed gambling sites will have to follow addition rules before they can make anyone a VIP customer.
These new rules are:
- Establishing that a player can afford the VIP spending required and that this is sustainable and part of their ‘leisure’ spending. This means more intensive source of funds checks.
- Investigate whether the player has an vulnerability risk or signs of problem gambling through closer monitoring and cross-checking with relevant gambling protection agencies.
- License holders must have current evidence relating to identity, occupation and source of funds and then continue to assess the information provided along with conducting ongoing gambling harm checks to detect sign of harm at an early stage.
Operators have also been issued guidance to install a senior manager with a personal management license to oversee any VIP schemes, making that person personally accountable for the actions of any programs for higher stakes customers.
Why Are The New Rules Needed?
The 2005 gambling act and the UK gambling commission were established, largely, to prevent crime in the industry and to protect customer money and the integrity of the industry as a whole. Few would argue that licensing has been a good thing compared with the wild west that came before but even in 2005 regulators could not foresee quite how much online gambling would grow by 2020.
The 2005 act has been described as analogue and not suitable for the digital age, hence why the UKGC is steadily trying to introduce additional guidelines to patch over the cracks that the 2005 act does not deal with fully. Even the addition to the original act that came in in 2014 to deal specifically with remote gambling is already outdated. It is felt adding another amendment is no longer sufficient, hence why a completely new act (and perhaps even a new regulatory body to replace the UKCG) is needed.
The UKGC has decided to tackle the VIP issue early rather than wait for a new act to come in, party because they have come under attack over the last year by campaigners who state the body is not fit for purpose and should be doing more to help vulnerable people. This comes on the back of new verification rules and a ban on credit cards for gambling that were launched in April along with emergency measures introduced during the corona virus induced lockdown.
Betting companies are private businesses who’s principal objective is to make money. Many brands make most of their money through VIP players, who make up around 2% of online gamblers yet they can contribute more than 80% of deposits. This puts companies at cross-purposes as the desire to offer safe and responsible gambling often sits at the opposed end of the spectrum to making money from their highest stakes players.
Many will say this is too little to late, although it seems these measures are mainly a bridging measure until the new gambling act, which will likely spell out more restrictions to these schemes. An outright ban is even possible. Some companies, such as GVC owned Coral and Ladbrokes have already decided to end their loyalty and VIP programs in expectation of this.
Will There Be Further Changes?
It is almost guaranteed that VIP Customers will be subject to further rules around the source of their funds, affordability and sustainability along with much closer monitoring as part of next years gambling act.
On the back of the current rules it may drive smaller companies to terminate their VIP schemes due to the additional resources needed to monitor users and their funds. Larger brands may keep these programs in a reduced form. Either way they will be different to before with perhaps less incentives such as hospitality and enticements for customers to gamble.
For the customer the biggest change will be the increased monitoring and checking of funds. This will put some people off who value their privacy but at the same time it will help protect problem gamblers, who are disproportionately represented in VIP programs, and the use of fraudulent or stolen money.
What Has The UKGC Said?
Neil McArthur, Gambling Commission chief executive, said:
“We have introduced these new rules to stamp out malpractice in the management of ‘VIP’ customers and to make gambling safer. Our enforcement work has identified too many cases of misconduct in the management of VIP schemes and this is the last chance for operators to show they can operate such schemes appropriately.”
He went on to point out that customers using VIP schemes “has already reduced by 70%” in the last year showing signs of a positive impact.
In a sign that the UKGC are prepared to go further if operators do not fully adopt these changed McArthur pointed out:
“If significant improvements are not made, we will have no choice but to take further action and ban such schemes”
This precedes another consultation due to be launched on customer interactions by operators assessing:
“Affordability, identifying vulnerability and how to take early preventive and reactive action when there are risk indicators. It will also shortly respond to a consultation on safer online game design. “