Joonas Karhu, chief business officer at Bojoko, speaks to Gambling Insider about the affiliate’s views on loyalty schemes at online casinos, in the wake of the Gambling Commission’s tighter requirements for VIP customers.
If we could start with a bit of background information to VIP schemes and why they are so popular with operators.
For some casinos, the majority of their revenues come from a small number of high-value customers and to ensure those players continue to wager at their site, operators understand they must reward them for their loyalty and level of play.
In principal, it is just the same as a hotel upgrading returning customers to a superior room or a restaurant giving regular customers the best table in the establishment. But ultimately, it is about ensuring those that spend the most at a casino continue to do so.
Of course, with online casino sites, high-value customers must be closely monitored to ensure they can maintain their levels of spend and that they remain in control of their gambling activity because of the potentially negative consequences that can occur if they don’t.
VIP schemes have had a lot of bad press particularly in the last year or so; is this justified and do such schemes still have a place in today’s industry? Do they promote and encourage dangerous and problem gambling?
Opinions vary but myself and the Bojoko team believe that VIP schemes should be abolished. If you look at the stats highlighted in our white-paper on such schemes, it is clear they are responsible for the vast majority of Gambling Commission fines where responsible gambling is a factor in the fine being awarded.
More concerning, if you look at some of the headlines over the past few months with people stealing from employers to fund their gambling activity and, in the most severe cases, people falling into debt and taking their own lives, the scrutiny and calls for change are justified.
Ultimately, VIP schemes encourage players to at least continue to gamble at the level they have been to be awarded VIP status in the first place, and in some cases they will no doubt be encouraged to gamble more. This is a problem in my opinion.
While operators are now required to have greater checks in place when it comes to awarding VIP status, the very nature of what they are intended to do does not align with the steps being taken to ensure safe gaming and that all players are protected at all times.
Do the new Gambling Commission regulations, which include a series of checks such as source of funds and ongoing gambling harm checks, go far enough to trying to solve the issue of exploitation through these schemes? Or is it more for them to be seen to be solving the issue rather than coming up with regulation that should already be in place?
I do not think they go far enough. The Gambling Commission’s new requirements are what operators should have been doing in the first place, and those that are members of the Betting and Gambling Council have been doing since November.
Given the pressure being applied by the UK Government to the Gambling Commission and the wider industry, I do think the regulator has acted now to avoid being forced to introduce a ban on VIPs, although ultimately this may happen.
It seems the Government is going to take a closer look at high-value customers and VIP schemes regardless of the changes made by the regulator and may determine a ban is the only way forwards. If players continue to slip through the cracks, that will almost certainly be the case.
What measures do you think should’ve been put in place that were missed by the Commission?
For us, an outright ban on VIP schemes in the only way to properly protect players and especially high-value customers. In addition, operators must carry out thorough KYC checks on all players and advanced affordability checks on those that deposit and play with larger amounts.
As our report suggests, operators must have comprehensive processes and systems in place to monitor individual player activity in real time to ensure their levels of play do not indicate signs of problem gambling. If it does, the necessary intervention processes must be taken.
I think the Gambling Commission should therefore focus more on the additional systems and processes operators should have in place to monitor players and intervene where necessary rather than tweaking its rules to allow for the continuation of VIP schemes.
Should VIP schemes be banned completely, and would that help with the issue of problem gambling, or perhaps drive players to unlicensed operators? If so, why and what could be a better model to replace it, as a compromise?
I don’t think an outright ban would push players towards the black market, so long as UK-licensed operators continue to offer them a top-rated experience and broad reach advertising. To do this, they need to continue to focus on content, payments, innovative features and excellent customer support.
It must be remembered that players put a lot of value on a casino holding a GC license. The vast majority want to play at licensed sites so they can be certain they are trustworthy and reputable with the highest possible standards for fund protection and so on being met.
Do VIP schemes actually add value to the player experience, or are they more for the benefit of the operator, by using the customer through exploitation?
The word exploitation is a little strong. I think operators want to offer their high-value customers the best possible experience, and part of that is giving them special treatment such as their own account manager, unique bonuses, higher limits and so on.
For some players, VIP schemes undoubtedly add value to their experience and are a factor in where they decide to play. Of course, they benefit the operator too, encouraging those that deposit and play with large sums of money to continue to do so at their site.
If operators are able to properly KYC high-value customers and ascertain where their gambling funds come from, that will go a long way to improving protections, but ultimately I believe some players will still slip through and are at risk.
In this new era of regulation and safe gaming, that is simply not good enough.