Flight to the black market ‘almost inevitable’ with affordability checks

 

Flight to the black market ‘almost inevitable’ with affordability checks.

After the Racing Post revealed that one in six respondents to a major survey reported being asked by a bookmaker for their financial documents, the scale of affordability checks on racing bettors has been described as “surprising and disproportionate” by a leading industry analyst.

Given the extent to which bettors are being impacted by the intrusive and unpopular checks, Regulus Partners’ Dan Waugh also stated that the migration of punters with higher stakes to operators operating on the black market was “almost inevitable.” Regulus recently estimated that 20% of UK racing turnover has already shifted to the black market, resulting in a loss of £80 million annually in betting revenue.

More than 10,000 people responded to The Racing Post’s Big Punting Survey, which asked about a wide range of topics affecting racing bettors in Britain and Ireland. 16.6% said they had already been asked to provide pay stubs, bank statements, and other forms of documentation proving they could afford to bet.

Waugh, a consultant on gambling regulation and safer gambling who has frequently testified before parliamentary select committees, compared the scale of gambling-related harm to the prevalence of affordability checks highlighted in the survey.

“The problem gambling rate for people who bet on sport online is microscopic if they are not also doing online casinos or products like that,” said Waugh. “Horseracing has a lower problem gambling rate within sports betting than some other products.

“I think that 16 per cent of readers being asked for documents is surprising, even though readers of the Racing Post are more engaged in betting than general sports bettors. It does seem to be that a disproportionate percentage of racing bettors are being caught by these checks, given what we know from health surveys about the risks.”

In addition, the survey revealed that 3.6% of respondents knew someone who had used a black market bookmaker in the previous 12 months. Segmented data suggested that younger people and bettors with larger stakes were more likely to use illegal websites and products without licenses.

Waugh emphasised the dangers of losing higher-stakes bettors to the regulated market, which would have a negative impact on racing’s finances and cost the UK Treasury tax revenue.

“If you take the view that the Gambling Commission has been putting pressure on licensees to conduct affordability checks at relatively low levels of expenditure, then higher-staking customers are caught by that,” said Waugh. “I think it’s almost inevitable that higher-staking customers have greater incentives to go to unlicensed operators.

“Affordability checks are not the only reason; unlicensed operators don’t pay taxes and might be able to offer more generous inducements. But if you look at things that are changing then it seems highly plausible that higher-stakes customers are more likely to seek out unlicensed providers.”

The BHA on Thursday welcomed the Post’s survey as “an important piece of research that demonstrates the impact certain measures can have and the risks they pose to racing”.

Throughout the lengthy Gambling Act review process, the racing governing body has consistently made representations to the government, advising that affordability checks will drain the sport’s financial resources.

In a video address to the Thoroughbred Industry Employment Awards in York on Monday, Prime Minister Rishi Sunak praised racing’s economic and cultural impact on Britain. The British Horseracing Association (BHA) said that the Big Punting Survey presented yet another persuasive argument that should be taken into consideration by policymakers before the white paper is released.

A BHA spokesperson said: “The BHA has engaged extensively with UK government ministers and officials, as well as the Gambling Commission, setting out the unique relationship between racing and betting and seeking to reduce the risk of damaging, unintended consequences arising from this review for betting customers and the industry. We do not support blanket measures on affordability and believe that if measures are to be introduced, they should be proportionate, targeted at the individual and reflect their specific circumstances.

“This is an important piece of research that demonstrates the impact certain measures can have and the risks these pose to racing. We will strongly encourage government and policymakers to take this data on board as part of the Gambling Act review, which needs to be concluded as soon as possible.”

 

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