Written by

Kayode Kehinde

Kayode is a professional iGaming content writer and slots lover with extensive experience covering casino reviews, sportsbook platforms, top betting apps, among other emerging digital gambling products. He is known for creating sharp engaging iGaming content which readers absolutely love to read. He has a strong background in SEO, regulatory insights, and freelance coaching.

VIP programs have existed in a kind of ambiguous relationship to the overall gambling business for years. From one side of the equation, they function like virtually all forms of commercial reward programs providing loyalty-based rewards (i.e., exclusive treatment) to those customers who generate significant volumes of revenue to operators. As such, they function very much like hotel/airline and credit card company loyalty programs. However, the customer base rewarded by these programs is also likely among the most at-risk for negative consequences from their behaviour. As such, regulators in various jurisdictions have watched the tension build over time but have never resolved it. That tolerance appears to be coming to an end.

Why VIP Programmes Are Under the Microscope

The revenue generated by gambling operators using economic models of how they operate has long been understood. In most cases, online casinos and sportsbooks will be able to generate a large portion of gross gaming revenue (typically 70-80%) from only a small number of high spending players. As such, there are many VIP programs that exist solely to identify, develop and retain those very same players.

Regulators have identified the problem as being structural. Those players who are most likely to achieve VIP status on a given platform (through heavy deposits, high frequency of play and larger than normal bets) are essentially the same group that would also experience the greatest amount of gambling related harm. Therefore, when it comes to VIP players; account managers working specifically to increase a player’s spend levels, bonuses tailored to a player’s loss history and priority withdrawal processing for players making large deposits are all contributing factors to a situation where the interests of the platform and the well-being of the player are directly opposing one another.

There have been several high profile regulatory actions taken against operators who have placed their commercial interest above their responsibility to protect players from gambling related harm. To date, the United Kingdom Gambling Commission has fined operators upwards of £500m+ for allowing VIP players to lose substantial amounts of money without conducting adequate harm assessments or providing players with reasonable options to limit their exposure to potential harm. Enforcement action similar to that experienced in the U.K., has occurred in other jurisdictions including Malta, Sweden and Australia.

The Regulatory Actions Taking Shape

Across markets, regulatory bodies are increasingly adopting a more prescriptive approach to the operation of VIP programs. While the exact nature of those requirements will vary from one jurisdiction to another; there are commonalities across many of them.

• Enhanced due diligence prior to granting VIP status – Operators must establish through enhanced due diligence that an identified player’s source of funding aligns with their gaming spend, prior to enrolling such player into a VIP program (i.e., NOT after).
• Documented assessment of player’s ability to afford their spending when they reach specified loss/deposit amounts (with documentation supporting the operators’ assessment as to whether the player can afford his/her level of play).

Jurisdiction-by-Jurisdiction: Where the Pressure Is Highest

What Progressive Operators Are Doing Differently

Beyond compliance there are a group of operators working to completely redefine what VIP programs look like: instead of being based solely on player spend, they want to incorporate player well-being as a key program criteria. This will include:

• VIP tier systems that take both spending habits AND the players’ level of participation with the tool to determine the tier (players using limit setting and responding positively to well-being checks will be weighted higher)
• Customers are proactively reviewed for potential harms as part of their VIP experience at regular intervals (not just when enrolling)
• Responsible gambling information is communicated clearly to VIP customers by their Account Managers, not buried in the Terms & Conditions.
• Funds generated by revenue sharing agreements with problem gamblers’ treatment centers are distributed according to the size of each operator’s VIP program.

While these ideas do not remove the financial pressure associated with managing high value player relationships; they show that it can be done responsibly.

The Trajectory From Here

The direction in which VIP program regulations are going is very clear. It’s not a matter of whether standards for VIP programs will become tighter; it’s a matter of how fast they will tighten and what methods (voluntary operator adoption, mandatory regulatory requirements, or changes due to enforcement) will be used to achieve them.

For the U.S. market, which has only just begun to develop its responsible gaming regulatory framework, the experiences of more developed markets such as the U.K. and Sweden provide a very clear path forward. All of the enforcement actions taken, the fine structure imposed, the practices that have been specifically targeted by regulators – all of this has been documented and is available to U.S. operators now building VIP programs that do not take advantage of these lessons are creating future compliance issues within their foundation.

VIP programs will exist. Building commercial relationships with high-value players is an acceptable business practice and there is nothing inherently bad about recognizing a player’s loyalty and rewarding that loyalty. What is changing – and what will continue to change – is the level of responsibility that exists for VIP programs when the expression of that loyalty results from high volume gambling behavior. The existing standard of care for VIP programs is increasing and the operators who adapt to this new standard early on will be at an advantage over those who choose to wait until forced to comply.