Gambling Commission consults on the treatment of VIP customers

United Kingdom

The Gambling Commission has announced that it will be launching a consultation in relation to high value customers (HVCs), also known as VIPs.

The consultation will focus on the challenges that operators’ incentivisation of HVCs presents from a regulatory perspective.

HVCs, by their nature, spend greater amounts of money and/or time gambling, meaning they are of commercial importance to operators. This often leads to operators rewarding their HVCs with gifts, invitations to events and preferential service in a bid to maintain or increase their custom.  In addition, as HVCs tend to be more engaged with gambling, they are likely to be at greater risk of gambling-related harm.

The Commission is concerned that these factors may lead to a conflict between operators’ short-term commercial objectives and their regulatory compliance.

As a result of its enforcement work, the Commission has found that existing regulatory requirements may not be sufficiently tailored to or correctly applied to HVCs. The Commission states that, under a risk-based approach, it would expect to see additional controls applied to HVCs. However, the consultation notes that the opposite is often true, with operators failing to strictly apply regulatory requirements to their HVCs.

The consultation has been expected, and it follows previous warnings that treatment of HVCs must change. Earlier in the year and at the request of the Commission, an industry working group considered operators’ treatment and incentivisation of HVCs. The group, which was made up of numerous gambling operators, produced a draft industry code for behaviour in respect of HVCs and agreed to:

  • restrict customers who are under 25 from being recruited to high value customer schemes;
  • ensure that, before becoming VIPs, customers pass full checks relating to spend, safer gambling and enhanced due diligence; and
  • maintain full audit trails for high value customer schemes, including detailing decision making with senior oversight and accountability.

Whilst the Commission urged the industry to implement the code, it concluded that voluntary undertakings would not be enough to ensure that licensees are held to account if bad practices continue. Therefore, the Commission now plans to use the industry code as the basis for this consultation and ensure that any changes are enshrined in the Licence Conditions and Codes of Practice (LCCP).

The consultation will ask stakeholders whether the following additional wording should be added to licence condition 5.1.1:

If a licensee makes available incentives or reward schemes for customers designated by the licensee as ‘high value’, ‘VIP’ or equivalent they must be offered in a manner which is consistent with the licensing objectives.

Licensees must take into account the Commission’s guidance on high value customer incentives.

In addition, the consultation will ask for comments on the Commission’s draft industry guidance on HVCs, which sets out the controls that should be in place in respect of HVCs. This includes controls around KYC, relationship management and use of incentives.

The consultation will open on 26 June 2020 and closes on 14 August 2020.