Open banking to regulate online gambling

In the Netherlands, a groundbreaking project could radically change the way online gamblers deposit money. The government plans to introduce a financial capacity test, based on open banking, to check users’ income and expenses in real time. 

Towards responsible control: the use of open banking

Imagine if a player wishing to deposit money online were subject to almost instant verification of his net income and expenses. This is precisely the scenario proposed by the latest draft financial capacity test examined in the Netherlands. Rather than relying solely on static declarations or documents, the researchers recommend using open banking (via the PSD2 standard) to automatically access essential financial data.

The idea is a bold one: to reduce the risk of gamblers getting into debt by monitoring their actual ability to bet without compromising their financial stability. But how would such a system work? And what are the ethical, technical and legal issues involved?

Three stages of verification in the proposed system

The report presented to Parliament details a three-phase approach to implementing the capacity test:

1. Verification of guardianship via the CCBR register.
2. Checks for existing arrears via the BKR (Dutch credit register) or other sources of debt (tax, unpaid rent, medical bills).
3. Assessment of the ‘financial margin’, i.e. the amount that the individual can reasonably devote to gambling deposits after paying their compulsory charges.

In this last stage, financial capacity is not estimated on the fly, but on the basis of banking data accessible via open banking. The report refrains from including liquid assets (savings, investments) in the calculation, believing that they constitute a snapshot in time and risk distorting the assessment.

One interesting point in the draft is that a mandatory reserve equivalent to 10% of net income is left out of the calculations, in order to preserve a safety margin for unforeseen circumstances.

Three test variants – and one recommendation

The researchers modelled three test variants, each with its own advantages and limitations:

• Variant 1 – ‘actual income and expenses via open banking’: this is the most comprehensive. The system compares net income with expenses (rent, energy, transport, food, childcare, subscriptions, etc.). It offers the best validity and objectivity, according to the authors.
• Variant 2 – ‘fixed standard of 30% of net income’: a simpler method to apply, where 30% of net income is automatically assigned as ‘deposit capacity’. Less precise in concrete situations, but easy to implement.
• Variant 3 – ‘income band scale’: the percentage allocated varies according to the income scale (for example, a lower proportion for very high incomes). It combines simplicity and adaptability, but requires the scales to be updated periodically.

At the end of the analysis, the researchers recommend variant 1, as it scores best in terms of validity and objectivity, despite its greater technical complexity.

The feedback debate

A key debate remains: how should the test result be communicated to the player? There are two schools of thought:

• Transparent mode: showing the player the maximum possible deposit, based on the financial data.
• Binary mode: simply indicate whether the limit increase request is accepted or refused, without revealing the underlying details.

The researchers recommend caution with the transparent mode, fearing that it may encourage some players to push their limits up to the proposed maximum. They suggest behavioural studies to test the exact effects of the feedback mode.

Towards healthier gambling… but at what cost?

The idea of checking financial aptitude through open banking represents a breakthrough in responsible gambling. By automatically cross-referencing income and expenses, the system promises to limit the risk of gamblers getting into debt by imposing deposit limits proportionate to their real capacity.

However, its success will depend on the balance between protection and freedom, data security and ease of use, rigour and social flexibility. The fact remains that this model could redefine the standards of online gambling, making personal finance a central part of the control process.