UKGC Plans to Eradicate Irresponsible and Unethical VIP Schemes

The iGaming industry is heading into a season of stricter compliance as Norway looks into a streamlined Gambling Act, the MGA enforces its suspicious betting reporting system and the UKGC takes action to protect players from unscrupulous VIP incentives.

 Problematic VIP Schemes

In its purest form, a VIP program is a player-friendly mechanism that allows an online casino or betting site to reward players for their ongoing loyalty. The concept is simple, the more value you present to a gambling site the more rewards you unlock, the problem, however, is when these programs become predatory.

Neil McArthur, Gambling Commission chief executive, said:

“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.”

The changes in the UK approach to VIP incentives comes off the back of reports highlighting how players were incentivised to spend large sums of money without any due diligence being done on the origins of the money, whether the player could afford the amount being spent and in key instances even in contravention of self-exclusion requests.

In such cases, these programs can be seen to be promoting addictive gambling behaviours and even contributing to criminal behaviour, something the UKGC will not stand for as it pursues a safer gambling environment for both players and operators.

Assessing and Mitigating Risk

The core intention of the mandate is not to limit the number of high-value players offered incentives or signed up to VIP programs rather it is aiming to create a guideline which ensures they are done so in an ethical manner and do not run the risks associated with problem gambling.

McArthur voiced the Commission’s intentions saying:

“Operators can be in no doubt about our expectations. If significant improvements are not made, we will have no choice but to take further action and ban such schemes.”

At a very minimum the Commission requires licensed operators to assess and receive documentation supporting:

• Affordability – to establish that spending is affordable and sustainable as part of the customer’s leisure spend.
• Safer gambling – to assess whether there is evidence of gambling-related harm, or heightened risk linked to vulnerability.
• Enhanced due diligence – to ensure the licensee has up to date evidence relating to identity, occupation, and source of funds.

It has also instructed operators to ensure that there are clear lines of separation between those teams and individuals responsible for managing the players (such as VIP hosts) and those doing the assessments of the player profiles (such as Risk Managers).

By separating both reporting lines and not offering incentives it should limit the risk of collusion and any other form of malpractice.

 Protecting the Vulnerable

The Commission has provided operators with three primary baskets of vulnerability which they are expected to watch for:

• Personal - would include where an individual is experiencing poor physical or mental health, physical or cognitive impairment, suffering side effects from injury, medication or addiction.
• Situational - would include where an individual is experiencing financial difficulties, is suffering from domestic or financial abuse, has caring responsibilities, experiences a life change or sudden change in circumstances.
• Behavioural - would include where an individual has a higher than standard level of trust or high appetite for risk.

It is worth keeping in mind that when the industry addresses the protection of vulnerable or at-risk players it has nothing to do with their financial situation, age, or gender. Rather it is the classification of any player who runs the risk of developing an addiction to gambling.

 How To Offer Ethical Incentives

The UKGC has offered operators the following self-review guidelines to determine if their program will be considered fair:

• Incentivisation methods do not encourage risk behaviours such as chasing losses or accelerating frequency of gambling.
• The timing of incentives is not linked to periods of excessive play or significant losses.
• Information held on player habits and preferences is being used to inform responsible incentivisation.
• Incentives are proportionate to a customer’s spending pattern and consistent with the licensee’s affordability and vulnerability assessment.
• Tiered or structured incentive schemes are not promoted in a manner which results in individuals gambling excessively to obtain (or retain) their VIP level or status

The future of VIP programs and other incentive schemes is literally in the hands of the operators now. If programs are run ethically, they will remain a part of the UK market, if they continue to be predatory, they will be shut down.