How Much User Income Should be Spent on Gambling?

Regulatory body, the United Kingdom Gambling Commission (UKGC) has made headlines after releasing their latest whitepaper which details and proposes various reforms for the gambling sector. Established under the Gambling Act 2005, the UKGC oversees all gambling activities in the UK, mainly the licensing and regulation of operators and works independently from government.

Among many proposals put forth in the whitepaper, one key element we are highlighting today is the topic of affordability and financial vulnerability. Although gambling can be entertaining, there is always a risk of financial harm when people spend more than they can afford.

So that begs the question – how much of their income can a person spend on gambling without hurting their finances? Let’s find out what the UKGC has to say on this matter as we explore and explain their suggestions and proposals relating to the financial vulnerabilities of gambling.

Relation Between Income and Gambling Activity in the UK

Income doesn’t always influence the gambling habits of people. Not every low-income individual indulges in gambling with the hopes of making money. Nor does every high-income Brit spend thousands on gambling. In the end, it’s a matter of personal preference and interests.

However, some interesting findings from YouGov’s 2021 survey explores the relationship between UK gambling habits of people based on their income.

• Contrary to popular belief, it’s not the low-income earners but the affluent people who are more likely to spend on gambling, especially in Euromillion and sports betting.
• Low-income groups were found to be less interested in online slots and more involved in lotteries and online bingo.
• 31% of high-income and 23% of low-income earners reported being more willing to take higher risks when gambling.

In general, both groups face different issues that could lead to problems of gambling and financial harm.

For the low-income groups, the main risk is that gambling may seem like a good way to turn around their fortune or, at the very least, make some extra cash through winnings. They can get carried away by the hope and anticipation of winning money through gambling instead spending more than they can afford to lose.

The problem for the high-income groups is that they have a bigger appetite for risk, making them susceptible to taking bigger, harder losses. High income means that they are less likely to worry about spending on gambling compared to people with low income. This makes them vulnerable to gambling addiction.

In either case, users need to keep a close eye on their gambling habits based on their income. To protect users from gambling-related harm and financial harm, the UKGC has proposed some triggers and checks explained below.

Affordability Checks

An affordability check is a process undertaken by gambling operators to determine how much a person can spend on gambling activities without hurting their financial well-being. It typically involves gathering financial information from players about their discretionary income and gambling expenditure.

The UKGC proposes two policies to perform affordability checks and analyze financial vulnerability.

• For people who spend at moderate levels, a simple, unintrusive background check must be performed by operators. This includes checking their financial activities and records of any past debts, such as those in County Court Judgements. The trigger for this type of check at a moderate level is if a person incurs a net loss of £125 in a month or £500 within a rolling year.
• For high-spending players, a detailed financial risk check must be performed. This includes verifying their discretionary income, past gambling activities, and other information that provides deeper insights into their financial position.

The trigger for this type of check at higher spending levels is if a person incurs a net loss of £1000 within 24 hours or £2000 within 90 days.

When any gambling operator detects these triggers of loss threshold for any customer, they will have to respond accordingly and take necessary steps to limit the person’s gambling activity.

The UKGC also states in their whitepaper that they do not intend to set a fixed limit or percentage value on how much of their income a person should spend on gambling. They believe every individual should have the right to spend their money however they desire. That is why these triggers and checks have been proposed so that operators can detect signs of binge gambling or the possibility of unaffordable losses and intervene early on.

But there are going to be some challenges too. When operators detect harmful gambling behavior and impose restrictions, they may experience customer resistance. It’s a tough but obvious choice that operators must make between commercial objectives and customer well-being.

Stake Limits

Another policy proposed by UKGC is to implement stake limits, especially on slot games. They have determined online slots to be a high-risk product where people tend to play longer sessions, incur bigger losses, and are likely to get addicted. To curb these negative aspects of slot games, the proposal has been proposed to introduce a stake limit of £2 – £15 per spin.

Gambling risks are higher for people between 18 and 24 years of age, as these young people usually have low income and higher susceptibility to irresponsible gambling behavior. That is why the proposed stake limit for this age group is lower, within £2 to £4 per spin.

Implementation of stake limits will definitely have a positive impact, as it’s a simple but effective way of reducing the amount players spend on these games. However, the challenge is that lower stake limits per spin may lead players to spend more time playing longer sessions.

Establishing a Budget for Gambling

Keeping in mind these reforms proposed by UKGC, players can also implement a few things from their end to set aside their gambling budget without affecting their financial stability.

Disposable income is what’s left of your income after taxes have been paid. Discretionary income, on the other hand, is the money you have after paying taxes and covering all necessary bills and living expenses. So you need to calculate how much money you have after taxes. Then prepare a detailed list of all your expenses – food, rent, bills, etc., as well as other financial obligations such as insurance, college fees, etc.

When you are clear about these living expenses, set aside the required amount in advance. This will ensure that your regular cost of living is covered, and what’s left will be your discretionary income.

Your gambling budget should be derived from your discretionary income and not disposable income. Losing this money may not have a serious negative impact when all your necessary expenses are already paid for. Having said that, don’t spend 100% of your discretionary income on gambling, as it’s important to have additional savings for emergency expenses. Financial vulnerability is about covering regular expenses and being prepared to withstand and recover from financial shocks.

For example, if you were to lose your job suddenly, how would you fend yourself till you find another one if you don’t have any savings? It’s important to be prepared for unexpected financial risks. That is why you can’t afford to spend all your discretionary income on gambling.

Other Recommendations by UKGC

Apart from the proposals put forth by UKGC, which we discussed above, here are a few more important highlights from the whitepaper:

• Data sharing between casino operators and other financial bodies so that people with problematic gambling habits can be identified across all gambling platforms. This prevents players from indulging in harmful gambling by switching between operators.
• Reviewing the features of online games and removing those features which may increase the risk of unaffordable spending or addiction to the games. Also, ensuring that bonuses and incentives like free bets do not encourage harmful gambling activities among players.
• Making deposit limits mandatory because giving players the freedom to set their own limits proves to be ineffective. Often, players set limits that are already beyond their affordability, so it doesn’t do much good in restricting binge gambling.
• For land-based casinos, it has been proposed to implement cashless payments on gaming machines such as debit cards.
• Permitting casinos of all sizes to offer sports betting.
• Imposing a statutory gambling levy on operators. The UKGC will utilize this money to fund research, education, and prevention of harmful gambling activities.

Conclusion

With these recent proposals in the whitepaper, the UKGC is paving the way for a safer and more responsible gambling industry in this digital era. The main goal is to allow people to enjoy gambling activities and spend their money as they wish. However, it also ensures that gambling operators and regulatory bodies can identify risky gambling behaviors early on and make necessary interventions.

On the other hand, players should also be aware of the pitfalls and dangers of gambling addiction, uncontrolled spending, and unaffordable losses. Following and supporting these new reforms and keeping aside a fixed, affordable budget for gambling should be every player’s key responsibility and priority. That way, you can enjoy all your favorite gambling activities without running your financial condition.