COVID-19 disruptions dominate all global businesses agenda. Nevertheless, industry communications expert Jake Pollard details that betting leadership should expect higher scrutiny on VIP player engagements and interactions during a time of global crisis.
As the Coronavirus pandemic bulldozes into every facet of our lives, the £11.6m fine meted out to online sportsbook Betway by the Gambling Commission this month has, if not faded into the distance, then certainly not been scrutinised as closely as it might have been in normal times.
The fine, the largest ever recorded by a UK-licensed operator, would have been followed up with numerous critical articles about the industry in mainstream press outlets had COVID-19 not become even more significant in that short space of time.
One could even argue that it has taken much of the attention away from the sector at a very sensitive time. In the larger scheme of things, it can also seem trivial to be discussing it when we think of how serious COVID-19 is.
Nonetheless, the fine does raise questions that are hugely relevant to the industry – namely how operators target high-spending players and rely on them to generate 90% and more of their revenues; and whether it is capable of moving away from that model to one that is more sustainable and, just as important, to move beyond a model that attract Betway-style fines and the attendant criticism and regulatory pressures.
The 90/10 business model is as old as the industry, that is true, but the nature of VIPs has also drastically altered in the past 15 years.
Changing nature of VIPs
The rise of online gambling has ‘democratised’ the phenomenon: people who might not have been exposed to gambling in an analogue age can now access it much more easily, and it cannot be a surprise that the growth of remote gambling has coincided with a rise and regularity in the number of heavy financial penalties issued to operators.
In fact, the details of virtually every penalty imposed on a gambling brand over recent years highlight the true nature of how these VIPs are recruited.
Despite what the promotional materials (or Hollywood movies) like to portray, most of those players are not the professional, sharp gamblers blessed with model looks and deep pockets who know what they are doing (those winning punters have been restricted anyway).
They also often show clear signs of addiction problems, while serious questions have to be asked about the most basic anti-money laundering, know-your-customer and corporate and social responsibility procedures at these gambling companies.
Without fail, the GC’s fines, in relation to Betway or other brands, have highlighted the frankly shocking manner in which those operators work when it comes to unquestioningly and repeatedly accept huge amounts of money that are deposited and lost by the players concerned.
The speed at which they are placed on gambling brands’ VIP schemes also shows where operators’ priorities lie, while testimonies from affected players made to outlets like the BBC have shown that the VIP schemes often amount to little more than comping their accounts with free bonus money so that they keep playing and losing.
The Betting and Gaming Council told SBC News that it is “determined to raise standards. We are currently working with the Gambling Commission and our members to produce a new industry code of conduct for high-value customers that will ensure the highest standards are applied right across our industry.”
The BGC members’ work refers to the three industry working groups set up to issue new codes of conduct on reformed operator schemes for high-value customers and improving player safety measures around game design and ad-tech. The groups are headed up by GVC, Playtech and Sky Bet respectively and will present their findings and recommendations at the end of March.
The working groups have been criticised by anti-gambling campaigners, who say they merely represent the industry marking its own homework. When asked about these issues, a spokesperson for Ladbrokes-Coral owner GVC said the industry recognised the need for change.
“Historically the industry has pushed too far on VIP schemes and it is now fully aware that past practices are unacceptable; it has to behave with the utmost probity. For example, at GVC our VIP managers are not incentivised by the amount of losses (recorded by VIPs), they are rewarded on the overall business performance of the group.”
Seizing the opportunity
Many executives will freely admit that the sector must move towards a more recreational player base, that it would be hugely positive for its image and business practices, but, as the GVC spokesperson explains, “it’s also important to remember that the average stake from our players is £10, so there is some misconception as to how much players bet with operators”.
Therein surely lies a startling paradox for our industry: if most players’ average stake is £10 the fact that operators rely so heavily on high rollers shows how much it needs to change.
It also reveals how the industry’s reforms to its VIP or game design protocols must be far-reaching and transformative if they are to have a sustainable impact on how operators generate their revenues.
For now, the Coronavirus crisis has removed some of the glare of scrutiny from operators and the economic hit the country is going to take from the pandemic may make the government more reluctant to impose new taxes and costs.
Bookmakers’ online gaming portals will also prove useful in countering some of the sports betting losses they will be facing as a result of the sporting calendar shutdown, although they will have to be careful how they promote those products for fear of political or media condemnation.
The UK sector has the opportunity to formulate constructive ideas on how it can operate in a responsible way, benefit society and persuade those more reasonable politicians who want to see it reformed in a sustainable manner of its case. It must use that time wisely.