The UK Gambling Commission has announced what they’re calling ‘strict new guidance’ for the way operators will have to handle VIP customer schemes moving forward. Provided that suppliers follow the new guidance, ‘there should be no irresponsible incentivisation of high-value customers in the future.’
The debate around VIP schemes has raged for some time, with critics suggesting that they encourage gambling problems. Now the UKGC has finally confirmed that it is looking to stamp down on the abuse of VIP schemes in the future.
What are VIP Schemes?
VIP schemes are a form of loyalty bonus offered to gambling customers who spend large amounts of money on a regular basis. Designed to keep customers spending on site, they add extra value in the way of bonuses, bespoke offers and promotions, gifts and prize draws.
The major criticism of such schemes is that they can encourage people to gamble more than they can afford to lose. VIP schemes therefore regularly lead to problem gambling and have often been cited in regulatory sanctions on companies failing to prevent that from happening. As part of the Commission’s work to strengthen consumer protection, the regulator has made addressing these schemes a priority after seeing repeated instances of failure to protect high value customers.
In fact, in a study commissioned by The Guardian newspaper, the Gambling Commission found that VIP gamblers are more likely to be addicts than ordinary customers. Some 8% of the country’s 47,000 VIPs are estimated to be problem gamblers, more than 11 times the rate among the wider public.
What the new rules state
The key takeaway from the Gambling Commission’s announcement is that operators will need to appoint a senior executive who holds a personal management licence (PMLs) to be personally liable for VIP schemes. From 31st October 2020, before any operator makes a customer a ‘VIP’ it must also:
- Establish that spending is affordable and sustainable as part of the customer’s leisure spend.
- Assess whether there is evidence of gambling related harm, or heightened risk linked to vulnerability.
- Ensure the licensee has up to date evidence relating to identity, occupation and source of funds.
- Continue to verify the information provided to them and conduct ongoing gambling harm checks on each individual to spot any signs of harm.
The Chief Executive of the UKGC, Neil McArthur, said that gambling operators ‘can be in no doubt’ about what the Commission expects from them around this area in the future. He also made the point that the industry has one final chance to ‘get its house in order’.
He 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.
We understand that the number of customers signed up to ‘VIP’ schemes has already reduced by 70% since we challenged the industry to get its house in order, last year. These new rules are part of the Commission’s comprehensive programme of tougher enforcement and compliance activity which has also seen the introduction of strengthened protections around online age and ID verification, improved customer interaction practices, and the banning of gambling on credit cards.”
The new guidelines follow a two-month consultation which analysed a series of proposed measures made by a working group from the Betting and Gaming Council (BGC) and GVC.
Backing a continued ‘collaborative approach’ with the Commission, the BGC recommended an overhaul of VIP Schemes to be restricted to customers aged +25 and with all members agreeing to fully, independently audit their customer reward programmes.
How we can help
Ensure your practices follow the new guidelines and remain compliant with the use of our product suite and single, universal API. Hello Soda’s one simple, global solution, Sodium enables customer verification in real-time.
Our Future of Gaming guide details what we expect from the future of identity verification, KYC & AML for Gaming, eSports & Gambling Operators. Download it today to make sure you’re fully up to date: