Illegal gambling sites gaining foothold in UK
A new Black Market Evaluation Report commissioned by Deal Me Out appears to confirm some of the British gambling industry’s fears. The report, produced in partnership with Social Intent, reveals a trend towards increased use of illegal gambling sites by UK players.
The report suggests the UK is following in the footsteps of several other countries where regulations have been tightened in recent years. Although the UK is behind the curve in terms of time and volume, the patterns seen elsewhere are consistent and worrying and would be a major concern if replicated on a large scale in the UK.
This shift will affect players, the legitimate industry, the government and HMRC. Deal Me Out calls for a significant re-evaluation of the current approach to regulation.
More Brits using illegal gambling sites
The Deal Me Out report reveals that Brits are flocking to illegal gambling sites in increasing numbers. Key findings include:
- More than £10m was deposited at 10 illegal casinos, £3.6m of which was deposited by those with gambling addictions.
- An alarming number of school children (420,000+) are estimated to have engaged in unregulated gambling.
- Two thirds of those who have used self-exclusion schemes like GamStop have bypassed that self-exclusion to access the black market.
- The vast majority (84%) of industry content creators actively promote links to black market sites.
- Players use these sites despite reports that scams, fake games, and withheld winnings are rife, with 61% of respondents reporting having money stolen on withdrawal.
- Many struggle to distinguish between regulated and unregulated platforms.
- Universal Credit claimants deposit significant amounts in offshore gambling sites.
Why the black market is appealing
Multiple factors are contributing to this change. Illegal casino sites have heightened excitement, fewer restrictions, and a promise of 'freedom' all working in their favour.
All casinos promise thrills, but black market casinos can offer unregulated excitement. This includes access to certain functions which are banned by the UK Gambling Commission (UKGC), such as:
- Higher stake limits: These sites provide potentially larger wins than those which adhere to the UKGC’s £2/£5 limit.
- Bonus buy features: Illegal in the UK since 2020, bonus buys give players instant access to the bonus round in return for an expensive premium.
- Turbo spins: Features such as ‘turbo spins’ and ‘turbo modes’ increase the speed of gameplay beyond UKGC-approved levels.
- Autoplay functions: Autoplay can result in large amounts of money being wagered in a short period of time.
All of these outlawed mechanics make slots more stimulating and potentially more harmful. And they can all be easily found on black market platforms. The opportunity for bigger wins is sure to be a key factor, but it may also be the case that playing ‘outside the system’ contributes to the excitement.
Less red tape
Additionally, a lack of red tape adds to the appeal for many. Many players expressed concerns about background affordability checks and invasions of privacy. At illegal casinos, there often aren’t any of these checks.
It may also be that some are drawn to these sites because they accept alternative payment methods. The UKGC does not approve the use of cryptocurrencies, for example, but they appeal to some players who value anonymity and that transactions can easily be hidden from banks and family members.
Fewer checks
According to the report, illegal sites appeal strongly to those who have excluded themselves from licensed sites. This is particularly worrying, as it renders the self-exclusion option – a significant and absolute option for struggling players – virtually pointless.
Weak policing is yet another factor. The Deal Me Out report indicates that many of these illegal companies operate in plain sight, using popular social media and influencer channels to promote themselves.
On top of all this, players currently have little incentive not to use these sites. There’s little chance anyone’s going to stop them, or that they’ll get into trouble.
Regulations driving exodus
The UKGC has been stuck into its White Paper Review for a few years now. This is the first major gambling law overhaul since the Gambling Act 2005, and has resulted in tightening many regulations.
These regulations have been perceived as heavy-handed by many, and have pushed players away from legal sites.
Despite only having recently been introduced, the impact of financial background checks has already been seen.
Stake limits have also just arrived, with £2 and £5 per-spin limits being applied to slots for players aged 24 and under, and 25 or over, respectively. Stake limits are likely to have a profound effect on how satisfying players find legal games, again pushing them towards the black market.
Aggressive influencer marketing
But it’s not just the UKGC’s overregulation that is pushing players away from the legitimate market. The exodus is catalysed by illegal sites’ aggressive marketing tactics which include daily promos, VIP offers and more. This combined push and pull effect appears to have created a perfect storm.
The significance of influencers promoting the black market is an underexplored area. The report exposes the fact that content creators are using channels such as YouTube, Twitch and Discord to push illegal gambling. It was found that 84% of content creators/influencers have been promoting unlicensed sites.
There seems to be little in place to dissuade black market casinos from doing whatever they want, and the blurring of the lines between legitimate and illegal is concerning. Considering this, it’s unsurprising that many players can’t tell the difference between legal and illegal platforms.
The influence of these ‘content creators’ is profound, with the report finding that just one black market site had more than one million hits in a month.
Prevalence among children
One of the most shocking trends in the report’s data concerns children. 1,250 children were surveyed, versus 300 adults.
Due to the lack of restrictions on black market sites, children have ready access to them. It appears, according to these stats, that the prevalence of gambling underage may be underreported.
Many school-age respondents also report being targeted by marketing and influencer directions relating to illegal sites, even on a daily basis.
One of the UKGC’s central objectives is the protection of minors, so it’s likely to take this revelation seriously.
Warnings not heeded
As stark as the findings of the Deal Me Out report are, they are not exactly surprising. Warnings have been raised repeatedly, from within the UK gambling industry and elsewhere, with many citing the patterns of thriving black markets in other countries.
The worsening situations in Germany and the Netherlands are clear indicators of the damage that overregulation can do. Both of these countries, as well as Australia, have seen sharp rises in illegal gambling since the introduction of new restrictions.
Research was done to support consultations on the new legislation, as part of the Commission’s drive for evidence-based decision-making. This research contained data which suggested that tighter regulations might push players away from the legal market.
Research and data seemingly ignored
This data seems to have been ignored and even buried in some cases. For example, the UKGC even refused to reveal survey results that confirmed the public’s rejection of background affordability checks, until it was revealed under a freedom of information request.
There has been no shortage of cautionary tales from abroad, or of warnings from concerned UK organisations such as the Betting and Gaming Council, or even from the UKGC’s own research. All of the evidence was there, but the regulator went ahead anyway, and it has yet to justify itself in this regard.
Worse before better…
The public is quick to react to regulations, as we’ve seen with the introduction of background checks and the impact they have had on horse racing. However, stake limits have only just come into play, and we’ve yet to see the backlash.
Also, as players leave legal sites, the value of the levy will decrease, as will the value of taxes collected by HMRC. This will worsen the situation further, and push yet more players towards the black market, which benefits from and capitalises off problem gambling and player vulnerabilities.
The government and Commission have yet to acknowledge their mistakes, let alone commit to fixing them. For these reasons, we can expect things to get worse before they have any chance of improving.
Acknowledge mistakes and re-think
As the overall popularity of gambling rises and the population size increases, so too will the number of problem gamblers. This is to be expected. However, the rising proportional popularity of the black market is cause for concern.
Firstly, the UKGC needs to acknowledge its mistakes and make some effort to justify its clumsiness. It needs to explain why it failed to heed the very apparent warnings, and it should restate its intention to be proactive and balanced. A significant re-think is needed.
The regulator should begin actually using the ‘evidence-based decision-making’ approach which it proposed. Additional research may be required, and the Commission should look to organisations like Deal Me Out to help with this. Wider discussions should be had which include operators, players, charities and other stakeholders.
Policing must also be improved. Strong regulation without strong enforcement is pointless – if the UKGC is going to implement rules, it needs to actually ensure they are enforceable.
Education and action
Education is key, and funds from the recently-introduced levy should be used to ensure that children are made fully aware of the dangers of illegal gambling.
Deal Me Out has outlined a call to action directed at the Commission, asking that it:
- Prioritise a black market public awareness campaign
- Address lax social media advertising regulations
- Consider the consequences of recently-implemented restrictions
- Encourage collaboration and communication
The UKGC is playing with fire, and a quick response to these trends is essential for the wellbeing of the industry and the health of individual players. It should remain open to the possibility of a reassessment, and to retracting some of its recent regulations, or at least dialing down their severity.
Summary
Deal Me Out’s report reveals a rising amount of illegal gambling, shedding some light on the damage that has been done by the UKGC’s recent overregulation and refusal to heed warnings.
The black market appeals to players for many reasons, and uses aggressive marketing tactics to draw customers in whilst benefiting from the dissatisfaction caused by overregulation.
Much damage has already been done, and the public are quick to react to regulations. Because some limitations have only just been introduced, we can expect the situation to worsen before improving.
The UKGC’s next steps are pivotal, and they must be made in a calculated, sensible and informed way.