Loyalty Rewards

The Gambling Commission’s code has rules for any incentive or reward scheme, and further rules for schemes for customers a licensee designates as high value, VIP or equivalent. All of it is the Gambling Commission’s code and guidance for Great Britain, applying to Commission licensees of the types each provision covers.

The Licence Conditions and Codes of Practice say compliance with social responsibility code provisions is a condition of licences, while ordinary code provisions do not have the status of operator licence conditions but set out good practice. The Commission’s high value customer guidance says it does not supersede existing requirements but sets out the minimum standard that must be met to achieve the intended outcomes for high value customer schemes.

Rules for Every Reward Scheme

Social responsibility code 5.1.1 covers any incentive or reward scheme, or other arrangement under which a customer may receive money, goods, services or any other advantage, that a licensee makes available to any customer or potential customer. The licensee must set out terms and conditions that are clear, transparent and fair, and readily accessible to anyone offered it. Among other things, it must not:

• apply wagering requirements on bonus funds “over a maximum of 10 times”;
• include more than one type of gambling product (betting, casino, bingo and lottery) within an incentive;
• alter or increase the receipt, value or amount of an incentive if the qualifying activity or spend is reached within a shorter time than the whole period over which the benefit is offered.

Under social responsibility code 5.1.9, a licensee must ensure all significant conditions of marketing incentives are provided transparently and prominently, and the terms of each marketing incentive must be made available for the full duration of the promotion. Ordinary code 5.1.2 says a licensee should only offer schemes whose benefit is proportionate to the type and level of customers’ gambling.

Which Schemes the VIP Guidance Covers

The guidance says there is no single definition of a high value customer: how a licensee categorises and manages them is determined by its business model and is relative to its overall customer base. It covers customers identified as being of enough commercial value to warrant enhanced customer service unavailable to the wider customer base, and specifically schemes that offer tailored or personalised incentives linked to high value spend or frequency of play. Such treatment may include, but is not restricted to, invitations to hospitality, events or dinners, personal account management or a dedicated point of contact, and individualised bonuses, benefits or gifts.

The guidance is not intended to cover ad hoc, non-personalised bonus offers or promotions made available to large numbers of consumers, nor high value prizes in promotions such as free prize draws where open to the wider consumer base. A loyalty scheme outside that scope falls under the general rules of code 5.1.1 and under code 5.1.2.

VIP and High Value Schemes

Code 5.1.1 says a scheme for customers designated by the licensee as high value, VIP or equivalent must be offered in a manner consistent with the licensing objectives, and that licensees must take into account the Commission’s guidance on high value customer incentives. The guidance says a licensee will need to be able to explain the reasons for any departure from the guidance’s minimum standards and evidence how its alternative approach is equally effective at preventing outcomes contrary to the licensing objectives. The guidance says a licensee that cannot meet the guidance’s minimum expectations should not be operating high value customer incentive schemes.

Checks on VIP Customers

In its guidance on high value customer reward programmes, the Commission says that as a minimum it would expect a licensee to be able to evidence that these checks are undertaken before making anyone a high value customer:

• Affordability, to establish that spending is affordable and sustainable as part of the customer’s leisure spend.
• Safer gambling, to assess whether there is evidence of gambling related harm, or heightened risk linked to vulnerability.
• Enhanced due diligence, to ensure the licensee has up to date evidence relating to identity, occupation and source of funds.

Absent any change in the risk assessment, the guidance says a licensee should review a high value customer’s account at least quarterly. If a high value customer fails any of the checks, it says their high value status should be suspended immediately until the licensee has addressed the risk identified in line with the relevant regulatory or legal requirements, and a customer unable or unwilling to provide the information required should not be considered eligible for high value incentives.

The guidance says a licensee should take reasonable steps to check whether a customer has previously self-excluded, and that the circumstances in which it would be appropriate to incentivise a previous self-excluder as a high value customer are limited. The Commission expects the accountable personal management licence holder or equivalent to review the risk and sign off any decision to give a previous self-excluder future access to high value schemes or incentives, and the guidance says the audit trail for that decision should include the steps taken to mitigate the risk of harm, which as a minimum should include mandatory deposit or spend limits.

How VIP Incentives May Be Used

The guidance says high value incentives should not be used to exploit vulnerable customers or encourage problematic behaviour, and the Commission expects the accountable executive or equivalent to be able to demonstrate how they have assured themselves that, among other things:

• incentivisation methods do not encourage risk behaviours such as chasing losses, excessive time or money spent gambling, or accelerating frequency of gambling;
• the timing of incentives is not linked to periods of excessive play or significant losses, in proportion to the customer’s affordability of spend;
• incentives are proportionate to a customer’s spending pattern and consistent with the licensee’s affordability and vulnerability assessment;
• tiered or structured incentive schemes are not promoted to high value customers in a way that results in people gambling excessively to obtain or retain a status that is unsustainable.

Given the personal service extended to high value customers, the guidance says staff may become aware of risks linked to vulnerability, and that licensees must ensure staff do not exploit such vulnerabilities, whether through the provision or characterisation of incentives or through contact that goes beyond a professional level to become one of friend or confidant.

Protections for VIP Customers

The guidance says licensees should consider the risk that these customers delay seeking support for fear of losing their status and rewards. To further protect them, it says licensees should:

• provide regular and enhanced information on gambling management tools;
• offer an active choice whether to set account limits;
• make safer gambling resources available at any appropriate point of contact;
• regularly review the customer’s suitability for incentives;
• promptly comply with a request to be removed from a reward programme and stop any personalised incentives immediately;
• take action to restrict or terminate personalised incentives if the customer’s spend or play exceeds their usual habits with no supporting explanation.

When There Are Signs of Harm

Social responsibility code 3.4.3, on remote customer interaction, applies to remote casino licences, though not to ancillary remote casino licences. A licensee within its scope must tailor its action to the number and level of indicators of harm exhibited, and this must include, but not be limited to, systems and processes that deliver reducing or preventing marketing or the take-up of new bonus offers where appropriate. Where strong indicators of harm, as defined within the licensee’s processes, have been identified, it must prevent marketing and the take-up of new bonus offers.

Before you join a loyalty scheme or accept an invitation to VIP status, we’d check these points.

• Who licenses the operator. The Gambling Commission’s code and guidance apply to its licensees, so check whether the operator you are dealing with holds a Gambling Commission licence.
• The full terms. Read a reward’s terms and conditions before you play towards it, and keep a copy of any you are relying on.
• Wagering on bonus funds. Find the wagering multiple on any bonus a reward pays out and compare it with the 10 times cap.
• Products bundled together. Check whether a casino reward asks you to place bets, or play bingo or a lottery, to earn or release it.
• What a tier asks of you. If reaching or keeping a status would mean playing more than you planned or can afford, treat that as a reason to step back rather than a target.
• Limits and leaving. If you are offered VIP status, ask how to set account limits and how to leave the programme before you need either.
• Offers after losses. Note any offer that arrives straight after a long session or a heavy loss, and consider stopping rather than accepting it.