Paying by Phone – The Next Challenge for the UKGC?

Posted by Harry Kane on Thursday, August 20, 2020

Ever since the UKGC announced its core strategic objectives through 2021, it has become clear that the safeguarding of vulnerable players and protection of the iGaming industry’s reputation are of paramount importance.

These goals have underpinned a number of measures imposed by the UKGC since the beginning of 2018, with one the most sweeping (and recent) resulting in a total ban on wagering with a debit card in the UK as of April 14th.

However, operators have been quick to introduce a new and equally controversial payment method to replace debit cards, in the form of ‘gambling pay by phone’. But what exactly is this, and will it find itself the latest target of regulators in the marketplace?

What Do We Mean by Gambling Pay by Phone?

If you were to perform a quick Google search of this supposed payment method, you’d see that it’s featured on a surprisingly diverse selection of affiliate marketing sites and UK-facing casinos.

These include dedicated generic and universally accepted pay-by-phones service providers such as Payforit and Boku, while a host of new competitors are continuing to emerge in this space with every passing day.

OK, we hear you ask, but how exactly does this payment method work? In simple terms, customers will choose how much they want to deposit with a particular gambling site, before providing their phone number as part of the registration process.

They’ll then be sent a verification code via SMS, and they’ll need to enter this on the gambling site to verify their new account.

The online account in question will then be credited with the selected amount in full, with this sum simultaneously added to the customer’s next mobile bill.

Now, while there are currently relatively strict limits on how much money users can borrow through the channel, these are set relatively high at £40 per day and £240 each month.

However, this represents just the tip of the iceberg when it comes to considering the challenges posed by this potential payment method, with critics also concerned about the fact that some casinos and platforms featuring don’t enjoy full licensing from the UKGC.

Even then, the biggest issue is arguably the fact that gambling pay by phone represents a new and more nuanced solution that allows players to wager using a veritable line of credit. In this respect, it may be seen as a direct replacement for prohibited debit cards, and subsequently used to circumvent the ban that was recently rolled out nationwide.

This concern is compounded by the fact that players can subsequently settle their phone bill using a debit card, enabling them to indirectly wager using borrowed funds that may be well beyond their existing financial means.

This, along with prevalent and increasingly accessible short-term loans that may also be used to borrow funds and drive deposits through a reputable bank account or Visa debit card, is creating a genuine threat to responsible gambling in the UK and may well become the next target for the UKGC and our nation’s regulators.

Is the Regulator Right to Be Concerned?

Ultimately, both of these payment options have been raised as potential concerns in Parliament, with Labour MP and staunch anti-gambling campaigner Carolyn Harris particularly critical of the loophole that allows players to essentially wager using funds that may have been drawn through payday or short-term loans.

Now that players can also use a mobile phone bill to wager and fund their online wagering habit, problem gamblers have yet another channel that’s incredibly difficult to monitor or regulate over time.

While many (including the player-oriented UKGC) will share these concerns and remain committed to ensuring that vulnerable players are safeguarded as effectively as possible, the question that remains is how can these new payment threats be tackled successfully?

In terms of the pay by phone method, it could be argued that the regulator could simply extend its debit card ban further to include this newly-discovered channel.

After all, the UKGC has already taken steps to ban certain e-wallets that have direct links to debit card accounts and payment providers, and in this respect, developing a more comprehensive regulation would require little logistical thought or effort.

Such a move would probably follow an investigation and period of reflection, and there’s little doubt that the UKGC is already monitoring this trend preparing a response as and when required.

However, the challenge posed by so-called payday or short-term lending is arguably far more difficult to overcome.

The reason for this is simple; as players are currently able to fund their activity freely using a Visa debit card or bank transfer through services such as Trustly. However, there’s no way of telling how specific bank account funds have been generated, which is just one of the reasons why the regulator has introduced stringent anti-money laundering measures.

One potential solution has already been proposed by Carolyn Harris and the All Party Parliamentary Group (APPG) for Gambling Related Harm, with this taking the form of a £2 betting cap for slots.

This has been formally proposed by the APPG, while some have even suggested that this could be extended to include all iGaming verticals. This would indirectly tackle the amounts wagered by problem gamblers regardless of which channel they use to fund their accounts, while it would operate in much the same way as the controversial £2 FOBT cap rolled out last April.

This would represent a relatively extreme solution, however, and a more measured approach could the regulator create more stringent measures for verifying each player’s source of income.

The UKGC has already tightened its verification processes to prevent players from wagering before their ID and age has been confirmed, and there would be little stop this being extended to allow for stringent checks on a customer’s earnings and ability to justify their monthly iGaming spend.

This, along with increased deposit limits and the continued fortification of the GAMSTOP service would definitely help to tackle the issue of problem gambling without arbitrarily banning payment options.

However, what’s unclear is whether this would be enough to satisfy a government that’s increasingly inclined to crackdown on iGaming in the UK?