Wilna van Wyk

Two legislative bills have been introduced in Illinois that look to curb the use of artificial intelligence and introduce mandatory affordability checks. 

Senator Bill Cunningham introduced two brief bills, SB 2398 and SB 2399, which have both been referred to the State Assignments Committee. 

The Illinois Senator’s proposals are taken directly from the SAFE Bet Act, which aimed to create federal oversight of sports betting. It suggested limitations on the number of deposits, mandatory affordability checks, and limited utilization of AI, all appearing in the two bills. 

What’s in SB 2398 and SB 2399?

The full text of SB 2398 seeks to amend the state’s Sports Wagering Act. It would “prohibit a sports wagering licensee from using artificial intelligence to track the wagers of an individual; create an offer or promotion targeting a specific individual; or create a gambling product such as a microbet.” 

A microbet is defined as a wager placed on “an outcome or occurrence within a sporting event which may or may not be related to the ultimate result of the sporting event.” 

A micro bet is considered in the industry as a bet on a specific play in an NFL match. In contrast, Cunningham’s definition seems to broadly define any in-play bet generated by artificial intelligence. 

SB 2399 would make affordability checks mandatory for operators whose customers meet certain conditions. First, it would prohibit any licensee from accepting more than five deposits, regardless of amount, from an individual during a 24-hour period.

Secondly, deposits made by credit cards would become prohibited in Illinois. 

Finally, a sports betting operator in the Prairie State would be required to conduct an affordability check before accepting deposits from customers of more than $1,000 within 24 hours or $10,000 within 30 days.

The affordability check would require verification that the intended deposit amount is no greater than 25% of the monthly income of the person trying to make the deposit. 

Alternatively, the bill states “verification through a reasonable lender standard based the issuance of an unsecured loan for the proposed deposit through methods normally used by consumer lenders.” 

Massachusetts Senator Pushes for Even Tighter Gambling Regulations

Senator Cunningham is not the first to propose affordability checks on a state level, either. Massachusetts’ Sen. John Keenan filed SD 1657, titling it “An Act addressing economic, health and social harms caused by sports betting.” 

Keenan is a vociferous opponent of online sports betting and proposes banning in-play and proposition bets (regardless of AI involvement), prohibiting advertisements during live sporting events, and restricting compensation structures for affiliates and/or operators.

For the second time in as many years, he proposes raising the sports betting tax rate in Massachusetts from 20 percent to 51 percent, matching that of New York. 

In addition, Keenan’s bill would legislate monthly wagering capped at 15% of the customer’s bank balance.

Written By

Wilna van Wyk

Wilna van Wyk is an online casino enthusiast with over a decade of experience working with some of the world’s biggest gambling affiliates, including Thunderstruck Media and OneTwenty Group. She specializes in gambling sites and games and provides expert knowledge on the online casino industry’s essential fundamentals.

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The European gambling industry faces a unique set of challenges and opportunities shaped by varying national regulations and political motivations. One of these challenges is the affordability framework, which is becoming increasingly significant.

A distinguished panel of industry experts gathered at the CasinoBeats Summit to discuss critical issues of affordability checks, financial vulnerability and the evolving regulatory landscape within the gambling sector. The panel included Cernisevs, CTO at Blackcatcard; Steve Degiorgi, Director of Gaming Revenue at Enlabs; and Peter Marcus, Former Group Operations Director at Entain. The discussion was moderated by Joe Streeter, editor at CasinoBeats.

Panelists provided diverse perspectives and extensive experience to the discussion. According to speakers, the key reason for the diversity in gambling regulations is the political rationale behind them. For instance, in Spain, the regulatory stance is frequently adjusted, focusing mainly on customer protection. 

In the UK, customer protection and tax revenue are both major drivers. Each country has its own set of priorities and approaches, influenced by its political landscape rather than a unified regulatory framework. This divergence means that achieving a unified approach to igaming regulation among European nations is unlikely, as each country’s regulations are tailored to address specific national concerns.

These factors influence how gambling is permitted and regulated across different countries in Europe, leading to a complex regulatory environment that affects both market operations and customer protection. 

Panelists addressed the evolving regulatory landscape, noting that multiple governments, including those of the UK, Germany and Belgium, are increasingly requiring proof of affordability from gamblers. This regulatory trend aims to ensure that individuals can afford their gambling expenditures without experiencing financial distress. However, the implementation of such measures poses significant challenges, with concerns about privacy and practicality.

An alternative to a strict affordability model can be a focus on financial vulnerability. This concept is gaining traction as a more practical and compassionate approach. It suggests that signs of financial stress should preclude gambling activities, thereby protecting individuals from potential harm. The panelists agreed that this shift represents a more sensible and actionable framework, although implementation remains complex.

The gambling industry is also evolving in response to increased competition for screen time and customer engagement. The traditional model, where a significant portion of revenue came from a small number of high-spending VIP customers, is no longer sustainable. Regulations now encourage a more balanced approach, focusing on retaining a broader base of recreational players who contribute consistently without financial or social harm. This shift towards sustainable growth aligns with regulatory goals, benefiting both operators and customers in the long term.

In the broader context, there is a growing need for harmonized regulations and clear guidelines from policymakers to facilitate compliance and operational efficiency. The industry faces ongoing challenges due to disparate regulations, which can hinder business operations and innovation. For instance, in the UK, recent legislative changes are causing uncertainty as the market awaits further clarity from the UK Gambling Commission.

As Europe grapples with these regulatory complexities, the US market offers a chance to learn from these experiences. Starting fresh, the US can avoid the pitfalls seen in Europe by adopting balanced regulations that promote sustainable growth while ensuring customer protection.

In conclusion, the gambling industry in Europe is at a crossroads, facing significant regulatory and market challenges. However, these challenges also present opportunities for innovation and sustainable growth. By fostering better communication with policymakers and learning from global best practices, the industry can navigate this complex landscape effectively.

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With the intention of ‘boosting safety and choice for consumers’, the new measures are following a myriad of white paper consultations and will be implemented in four stages: August 2024, November 2024, January 2025 and February 2025.

In a bid to smooth the transition process as much as possible, these checks will initially come into force at £500 a month from 30 August 2024, before reducing to £150 a month from 28 February 2025.

Off the back of consultation feedback, the Commission will carry out a pilot to test the details of frictionless assessments in practice, working with credit reference agencies and gambling businesses to examine the potential consumer impact.  

The initial pilot period for these new measures will involve the biggest operators, in order to enable the UKGC to gain the deepest possible understanding over their impact. 

Furthermore, new regulations will also impact game design – reducing speed and intensity of online slots, as the UKGC underlines it is seeking to make them ‘fairer and increasing consumer understanding about game play’.

The extension of rules will reduce the speed and intensity of online slots and games as well, ending operator-led functionalities which facilitate playing multiple simultaneous products such as roulette and blackjack tables. Slam stops will also be curtailed as a result of the guidelines.

The regulations aim to end the ‘illusion of control’ when it comes to igaming in a bid to harmonise the guidelines across the igaming space. 

Rules that currently apply to online slots will also be applied to other games, eradicating audio or visual celebrations of returns less than or equal to stake. These additional changes will come into force on 17 January 2025. 

Additionally on this date, changes around marketing will be implemented, with operators being required to enable players to opt-in to the channels that they want to receive marketing from. 

Andrew Rhodes, Gambling Commission CEO, commented: “As a gambling regulator it’s vital that the introduction of new rules is based on evidence and takes into account the views of consumers and other interested parties.

“We have listened to the views expressed in our engagement and in the consultation responses, and we have made changes while still ensuring that we deliver meaningful protections. 

“We are also pleased to be taking forward a pilot of financial risk assessments and data collection, which together will ensure that we can make informed decisions about how these assessments can be implemented in a way that supports both consumer freedom and protections.

“We have to get the balance right between protecting people from the potentially life-ruining effects of gambling-related harm and respecting the freedom of adults to engage in an activity that the vast majority do so without experiencing harm.”

Updating the media, the UKGC’s Tim Miller was keen to emphasise the importance of balance and how impactful the consultation period was, highlighting the pilot and the extended period for implementation as being key to allowing businesses to adjust to the new framework.

BGC introduces new voluntary code

The changes come in line with the Betting and Gaming Council establishing a new ‘voluntary code on customer checks’, aiming to minimise frictions of financial checks and enhance the strength of KYC duties. 

These checks have been rolled out as a voluntary measure for BGC members, detailing actions required when customers’ accounts exceed net deposits of £5,000 in a rolling month or £25,000 within a 12-month period.

Members applying the code “must undertake a risk assessment of that customer to: i) understand their financial situation (if not already known); and ii) assess whether that customer is displaying any indicators of harm”.

For higher wagering customers, who deposit over £25,000 annually, operators will need to request financial documents, detailed as an “enhanced consideration (which may be similar to an operator’s existing enhanced due diligence process)”.

BGC Chair, Michael Dugher, stated: “This Code is good progress toward solving an issue that has generated such heated public debate. It will significantly increase the consistency of safer gambling standards while removing intrusive document checks for many who are currently subject to detailed checks.

“I wish to see a new Code on Anti-Money Laundering Checks to complement this Code on Customer Checks to further raise standards on consistency and reduce the disproportionate need for document requests, rightly ensuring that betting with our members remains free from crime.”

……..

Andrew Rhodes will be a key speaker at the upcoming CasinoBeats Summit in Malta.

You can currently purchase your tickets with a nice Group Discount for the price of just €400 (a discount of  €200 off a standard ticket).

Operators and affiliates can apply for complimentary all-access passes to the event.

Operators – apply for a free pass!

Affiliates – apply for a free pass!

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The study has suggested that the enforcement of tougher affordability checks has contributed to reduced revenues, supporting recent polling that found 70 per cent of bettors would be unwilling to allow regulated operators to conduct said checks to prove they can afford to wager.

EY’s published research noted that the online GGY for the industry has decreased since mid-2021, stating the re-opening of land-based venues, affordability checks and the decline in household income as potential causes behind this downturn. 

Michael Dugher, CEO of the Betting and Gaming Council, commented: “The UK’s regulated betting and gaming sector is a genuine global leader. Some 22.5m adults enjoy a wager, on the lottery, on bingo, on any number of sports, online and in casinos.

“Our members pump billions into the economy, support the Treasury with more billions and support over one hundred thousand jobs. But this contribution is never guaranteed. This industry needs to thrive if it is to maintain its status as a global leader.”

Despite these external issues facing companies, BGC members’ total gross value added contribution to the UK economy was £7.1bn, with the industry supporting 110,000 jobs on high streets, hospitality and global tech powerhouses. 

“As ministers consider the regulatory framework for this industry, they should stop and think, and ensure the decisions they make support a sustainable future,” said Dugher.

“This is a sector that is ready to invest, on hard-pressed high streets through bookmakers, in tourism and hospitality through world-class casinos and online where our tech giant members are looking to increase the number of apprentices they hire.

“We urge the government to find an evidence-led, balanced white paper that protects the vulnerable, allows the vast majority who bet safely to continue to do so, and crucially allows business to thrive.”

According to the EY study, the hardships facing operators “could in turn lead to leakage to the black market, i.e. operators offering remote gambling products that do not hold a UK Gambling Commission licence for remote gambling.”

Dugher added: “This industry is serious about safer gambling, and it’s encouraging that the rates of problem gambling among UK adults remains low by international standards at 0.3 per cent.

“We want to see technology used to ensure checks on spending are carefully targeted towards the vulnerable, not the vast majority who show no signs of harm.

“But without government clarity on affordability checks, our members are concerned they are driving frustrated customers to the unsafe, unregulated black market.”

“These sites have none of the safer gambling tools employed by our members, do nothing to protect young people, don’t invest anything in the sports we love like horse racing, rugby, darts and football and crucially don’t contribute a penny in tax.”

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Entitled Affordability for Gambling Tool, the product combines data assets from numerous sources at the individual, demographic and geographic levels on a ‘where available’ basis. This is said to allow operators to gain insight into multiple affordability indicators. 

Warren Russell, CEO & Founder at W2, said: “While we still wait with bated breath for the Gambling Commission to publish the result of its consultation on the Gambling Act 2005, it is clear that requirements around affordability are going to change and that operators will be required to do much more.

“Our Affordability for Gambling Tool has been developed to give operators a crystal-clear picture of the affordability of individual players but in a way that is not intrusive and does not impact their journey when signing up to a brand.

“This means that operators can meet any new requirements that come into force and avoid any potential fines and reputation damage they may be subject to in the event of non-compliance, whilst ensuring they build a true picture of their players.

“We are delighted to be developing this solution and working with other industry experts in our partners Crucial Compliance and nChain to tackle these inherent issues collaboratively.”

Furthermore, W2’s product will be delivered via the Crucial Compliance Player Protection tool that will see custom data consumption, either through API integration at onboard or trigger based on various markers of harm, ongoing monitoring for changes in player circumstance and verifying declared income without the need for documentation. 

The launch of W2’s affordability solution comes at a time when player affordability is very much under the microscope as part of the UK government’s review of the Gambling Act 2005.

As a result of the review, it is widely expected that the Gambling Commission will increase oversight and enforcement, especially when it comes to operators assessing and verifying player affordability.

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Earlier this year, the Gambling Commission asked stakeholders about the steps they believe remote operators should be required to take, in order to be able to identify and protect customers who may be at risk of harm. This could include customers spending increased amounts of monies within short periods of time or vulnerable customers being harmed by overspending within their monthly budgets. 

Following the long-running consultation, the Gambling Commission identified three key risks to be prioritised for action, including: significant losses over a short-time, significant losses over time, and financial vulnerability. 

However, following the DCMS’s direct involvement to lead the generational review of the UK’s gambling laws and standards, they have taken control from the UKGC, side-lining plans to conduct advanced affordability checks on all UK gamblers wagering over £100 a month. 

Pressed on whether the Gambling Commission had done the right thing in dropping proposed checks on affordability, Paul Foster, CEO at Crucial Compliance, revealed how there is a “common misinterpretation” on the matter. He explained that affordability checks have always been required on a risk-based approach which are linked to the requirement for source of funds used for gambling. 

He noted: “In this consultation the Commission was raising questions about the lower financial levels when affordability was required for those, primarily, on lower incomes. They linked this to the ONS data and as a result raised several red flags both in and out of the industry where the freedom of choice to spend customers’ own money could be brought into question. 

“Player protection must link all gambling related spend to affordability and responsibility”

“The industry is fully supportive of affordability and keeping crime out of gambling but believes in a risk and data driven solution based on third-party data.”

Foster revealed that the Commission had received a record amount of responses to the consultation with 10 times the average number of replies received. With the much broader spectrum of thoughts, he said that key questions were raised within their own organisation.

“These questions may have raised the complexity and legality of the lower-level affordability checks which meant the Commission has decided to stand back and continue to explore player protection as part of the holistic player journey and not just a set of generic triggers – which is where I believe the industry should be”, he explained. 

With the regulator now focusing on ways to prevent players from losing large sums, it no doubt raises the question as to whether or not it is a better way to protect players. Foster gave us his opinion, explaining that affordability is linked to actual spend and the responsibility around that spend. 

He continued: “If someone can afford it and wants to spend a large amount on gambling and can do it in a responsible manner, then this is not an issue. 

“I believe the focus on high spenders is more closely linked to the proceeds of crime act as most criminally obtained monies have been used by high value players in the past and the Commission has raised several operator investigations together with regulatory settlements around accepted criminal funds”

“Player protection must link all gambling related spend to affordability and responsibility if the regulation is to be effective, workable and successful”.

“Bespoke player protection systems are expensive to build but do carry major advantages over legacy adaptations”

Going further into detail on the challenges that could be brought on from an operator perspective, Foster acknowledged the expense and time needed to integrate innovative and technology led solutions to regulatory requirements. As an example, he mentioned that many companies have been developing a range of products from AI led algorithms to enhanced KYC systems which look at credit account turnover. 

He added: “Over time the cost of systems will reduce due to economies of scale on multiple operator implementation and the ease of implementation and integration through single APIs will also occur”.

“It is important for a clear link to be in place between suppliers and operators to be working in partnership with the player’s personal protection at the heart of the systems and processes.”

Foster’s advice on how operators can prepare for any enhanced affordability checks is to assess their current capabilities in the area and review against present and future expectations. He explained: “This will often mean the use of third-party specialists who can independently review their systems, processes and policies in a combined approach.

“Once these areas are known, a review of what is available on the market which can help them should take place. Of course, this approach can be costly and thus benefits larger operators. However, embedding a player protection system which can take multiple feeds will support a company through short and long-term goals. 

“This is where partnership comes in, as it is only through understanding the operator’s landscape including financial capability that an optimised solution can be built and implemented.”

He claimed that the way many companies are developing existing systems in order to carry out player protection functionality is a benefit for the industry, as it creates choice and keeps costs lower. 

He concluded: “Bespoke player protection systems are expensive to build but do carry major advantages over legacy adaptations. Companies need to consider why they are doing this and make a decision on their player protection partners. 

“Is this a regulatory compliance tick box process or are they really wanting to drive player safety and create a sustainable player base where customers use gambling as a form of entertainment?”

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The affordability check can be made at the most appropriate point for customers, said Experian, such as when there is a change in their account behaviour or specific behaviour may indicate an increased risk.

A customer must first give their permission but once they have done so, the Open Banking service from Experian will enable operators to understand a player’s income and expenditure – and how much they spend with other gambling websites. Gaming operators may also work with specific customers to set spend limits.

After approval from the UK Financial Conduct Authority, Experian can – with customer consent – use current account information to help organisations understand which products and services will be most suitable.

The Rank Group will embark upon a proof-of-concept trial of the service, which will begin “in the next few weeks”.

Tom Blacksell, managing director of B2B at Experian, said: “Innovative Open Banking services can help the gaming industry to protect its customers from problem gambling. People who choose to share data can prove they are gambling at a level they can afford, while gaming companies can meet their responsibilities to keep customers safe.

“Experian is already in discussions with a handful of the biggest gaming companies in the UK, who can see the importance of this affordability check. It is one of many new services we are working on to bring the benefits of data sharing to businesses and their customers.”

Rory Howard, director of customer diligence at Rank, said: “Rank Group welcomes this initiative. It’s a fantastic opportunity for gaming organisations to work collaboratively with an organisation such as Experian which is licensed to use Open Banking. The automated exchange of data in association with advanced analytics will enable us to help our customers gamble within their means.”

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