UKGC Opens Consultation on High Value ‘VIP’ Customers

For many years it has been a standard in the gambling industry to provide enhanced benefits for those customers that have proven themselves to be of high value. Is not only the background like celebrities that can boast such a title wherever they put a step, but also for those gambler's with a marked loyalty to a brand.

Free bets, cash bonuses, personal concierges, high-end clothing, and other expected lavish gifts and benefits to reward those gambler's that meet the necessary criteria to be considered of “High Value”.

However, further evidence has the increasing numbers of problem gamblers and the lack of control from operators to prevent these cases and their HVC programs are now being linked. In short, this VIP reward program entices and reinforces a destructive behavior in their patrons.

From May 22th until august 20th the UK Gambling Commission (UKGC) has opened a public consultation seeking views on proposed changes to the rules operators must abide by when transacting with high value customers. The purpose, providing a more safer reward program and stopping those encouraging harmful play.

High Value Customer Schemes

High Value/Volume customers are the ones that interact frequently with a brand. In the case of gambling, VIP customers are those that are financially able to keep engaging in any gambling activity in a profitable manner for the company.

To create loyalty with these VIP’s, gambling companies offer very attractive programs that create a distinction for these customers from the rest. The distinction usually comes in gifts, better promotions and access to exclusive features that beyond its monetary value, are aimed to create and strengthen an emotional bond linked to the brand.

VIP programs are based on a score (or spending) point system that register the volume of expenditure in a given time frame. Pokerstars VIP program SuperNova elite was in the early years of the online poker frenzy a milestone that besides the great monetary benefits the status provided it catapulted careers in the poker scene mainstream.

Problem Gambling and Gamstop Scheme

While the SuperNova Elite was considered in the poker community a badge of skill, seeking for it disrupted compulsive gambling cases. However, luck based games listed at UK casinos not on Gamstop or Gamban and specially slots involve greater risks towards it.

For a problem gambler the benefits of being an HVC only adds a layer of complexity to its compulsion as creates a false sense of security thanks to the positive reinforcement that such status creates in the problem gambler self-esteem.

As VIP scoring for these sectors depends on how much you spend, (not how assertively you play) problem gambling and deep pockets seem to be the winning ticket to achieve that recognition. Currently 2% of all customers make 83% of income for gambling operators. Among this group, 8% are problem gamblers.

A Matter of Self-Regulation

Given the tension between commercial objectives and customer safety, VIP programmes intended for high value customers (HVC) have come under the scope. From October 2019 gambling operators have the challenge to work together and develop a code of conduct that can ensure the incentivisation of high value customers also known as ‘VIPs’ being offered in a safe and responsible way.

The UKGC still allows tailored incentives and bonuses to continue to have a place in the

industry, but needs that operators be consistent with the licensing objectives. But if a licensee is incapable to provide that assurance,they would get restrained from offering such schemes/incentives.

What do Operators Propose?

Until date several th industry has proposed the following changes, many of them based and enhancing the current UKGC licensing objectives:

• Undertake full customer assessments before offering any HVC incentives, rewards or special treatment. These checks will be regular and ongoing and commercial pressures will never override welfare considerations.

• Licensees will maintain full audit trails relating to their HVC reward programmes including information collected and decisions taken.

• Licensees will identify a senior executive or board member who will have accountability for how HVC schemes operate.

• Operator teams that offer High Value Customer (HVC) Rewards Programmes will not receive remuneration or bonuses based on an individual’s loss and/or spend.

• Restricting access to /HVC schemes for 18 to 24-year olds (currently enforced)

• HVC reward programmes will be conducted with consistent, clear and transparent good practice to prevent gambling related harm.A number of positive and negative behaviours are identified in the guidance to ensure operators are not acting in a predatory or exploitative manner.

What do Experts Consider?

Feedback from experts aren’t that much optimistic regarding the former proposals. By experience, the risks that incentives pose to vulnerable groups are still highlighted and questions the ability of the industry to self-regulate. From all sides and perspectives, the general agreement is that HVC schemes should be banned altogether as they act as an accelerant for personal gambling.

The feedback also identifies heightened risks associated with social isolation and the sense of status associated with being treated as an HVC. The use (and abuse) of knowledge of customers’ preferences, habits and vulnerabilities by HVC staff to offer incentives, can be considered a transgression to prevent exploitation of vulnerable audiences, specially with cases of customers applying for self-exclusion and incentives still being emailed to them.

Finally, it was also identified that monetary based incentives were far more common and promoted than hospitality or gifts. Concern about the impact of customers striving for a higher tier of HVC status or gambling beyond their means to receive specific incentives, as free bets, was cited as problematic and something the Commission should address.

The Commission Expectations

The UKGC is currently expectant about the measures within the code being implemented within 3 months, as a significant number of commitments are based on or expanded upon existing regulatory requirements.

Once these requirements enter in effect the Commission will monitor and measure their effectiveness by collecting metrics regarding the number of HVC, their contribution to operator gross gambling yield (GGY) and how many customers are subject to and fail to meet the new due diligence criteria.

Final Words

The capability of the industry to self-regulate has become a morale debate considering that HVC programs have a predatory design to promote gambling frequency in order to achieve major earnings.

The trust vote the UKGC is currently giving to operators with this consultation might be their one-in-a-lifetime chance to reshape the industry from the very inside, by rethinking the way businesses are made and giving value to clients as humans, and not pockets to be picked.

Truly, a bold bet, that can provide a win-win outcome.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes