Black market gambling on the rise

Black market casinos are a major talking point right now, but their popularity fluctuates as regulators around the world tighten or loosen legislation.

In addition to encouraging harmful gambling and potentially facilitating criminal activities, black market casinos are a major threat to the legitimate gambling industry. 

In some countries it's argued that heavy-handed regulators have inadvertently pushed players towards illegal sites – a trend that has huge implications for the British gambling industry.

Recent developments

Britain is one of several countries which has recently introduced stronger restrictions on casinos. Others include Germany, the Netherlands, Italy, Spain and Sweden.

In response, representatives of high-profile European gambling operators have warned of the potential dangers of tightening regulations. 

In July 2024 CEOs from industry giants such as Betsson, Bet365, Flutter and Entain appealed for a more careful approach to legislation. 

They claim a causal connection between tightening regulations and the rising popularity of illegal gambling. Examining recent regulatory changes around Europe they make the case that “severe restrictions in these countries prevent an attractive and competitive offer to players” giving illegal sites an advantage.

But this isn’t just fearmongering for the sake of fewer restrictions; France has recently estimated that its four million illegal players now outnumber legal players, having surpassed them for the first time in history. And a recent study of the German gambling industry estimated that around 75% of online gambling revenue was being lost to illegal sites.

Clearly, the worldwide gambling industry is in the midst of a tidal, tumultuous shift.

Over-regulation harming the industry

The actual figure is incalculable, but the German and French economies are currently missing out on hundreds of millions of Euros in tax revenues. 

The sheer volume of players flocking to illegal sites in Europe is alarming, and it could prove catastrophic for the British economy if the trend was repeated here. 

With the British industry currently in the midst of a full legislative overhaul, concerns have been expressed about the possibility of new UK laws triggering a similar trend, pushing players towards illegal sites. 

One example of these laws is the £2 slots stake limit. Players used to staking more than this will likely find the new max limit unsatisfying, and they may well turn to offshore, illegal black and grey market sites.

Anti-black market measures

Unfortunately, taking down illegal sites is not as straightforward as one might expect. 

Nicolas Béraud of the French regulator AFJEL recently warned that illegal operators function “with complete impunity” and that “the blocking of illegal sites is still not working”.

Beyond Europe, similar trends can be seen. It was reported recently that the Australia Communications and Media Authority (ACMA) has been working hard to block illegal gambling sites.

ACMA has taken down more than 1,000 sites since 2019 and is now putting pressure on ISPs to take action against illegal operators. This may seem like a good approach, but the process is slow and time-consuming, and illegal sites often pop back up quickly with a new address.

Practically speaking, removing players’ access to illegal sites altogether is not going to happen, making it all the more essential that licensed operators can offer a competitive service. If legal casinos can’t compete with their shady counterparts, the criminals may as well have already won.

Black market casinos and gambling-related harm

One of the many concerns about illegal casinos is their low prioritisation of player safety, often disregarding, and sometimes even blatantly exploiting, the needs of vulnerable players.

For example, earlier this year it was reported that some black market operators had been specifically targeting players who had opted to self-exclude. This abhorrent abuse of susceptible players continues still.

It is vital that illegal casinos are not allowed to gain the upper hand in Britain, not only for the wellbeing of the legitimate gambling industry, but for that of the players that make it possible.

Illegal gambling in Britain

The good news is that these trends have, for the most part, yet to reach the UK. Whilst there are certainly British players who use illegal sites, the proportions aren’t anywhere near as stark as in territories like France. As it stands, illegal gambling rates in the UK are estimated at around 3%.

Regulators want to be seen to be proactive and fast-moving. However, tightening regulations too quickly can cause more problems than it solves. Trends such those observed in Germany and elsewhere must be heeded as a warning of what can happen when regulators overdo it.

The UK Gambling Commission (UKGC) is responsible for making and enforcing legislation, and it is crucial that they pay close attention to the patterns observed by our European neighbours. By using a lighter touch than our international counterparts, the UKGC could potentially avoid such a devastating trend in Britain.

Also, a more gradual tightening is less likely to be met with the sort of resistance that makes players turn to the black market. For example, by slowly raising stake limits rather than ham-fistedly hiking them up overnight, the UKGC may be able to minimise the inevitable backlash.

What is absolutely certain is that, if Britain is to avoid the chaotic flooding of players to illegal sites that has devastated other economies, the UKGC must move quickly. As the aforementioned letter makes clear, “the time to act is now”.