Recognising the Threat of Black-Market Gambling in the UK

Posted by Harry Kane on Sunday, March 14, 2021

There’s no doubt that both the UKGC and the British government is increasingly inclined to legislate in the region’s iGaming space, with the former focused on realising its core strategic objectives through 2021.

However, while lobbyists and the All-Party Parliamentary Group (APPG) for gambling-related harm may be proposing to clampdown on licensed operators and impose stringent bet limits, some are concerned that these parties may be overlooking the threat posed by rouge and black-market operators.

But what’s the true nature of this threat, and is the government being complacent about its potential impact? Let’s find out!

Exploring the Threat Posed by Black Market Gambling in 2021

One particularly stark warning has been made by the Betting and Gaming Council (BGC), which has told the government the perceived “danger of complacency” in underestimating the growth of black markets within the iGaming space.

To illustrate its point, the trade body referred to a PWC report which revealed that the number of bettors using black markets in the UK has more than doubled during the most recent reporting period.

Tracking the behaviour of players between November and December 2020, PWC’s comprehensive ‘Review of Unlicensed Online Gambling in the UK’ found that the number of customers using unlicensed betting sites had grown from 210,000 two years ago to a worrying 460,000.

This trend also precipitated a similar increase in the amount of money through unlicensed and scam operators, with this figure doubling from £1.4 billion in 2019 to £2.8 billion.

The takeaway here is clear, as there’s a growing share of stakes being placed with unlicensed betting brands. Not only this, but the rate of growth in this respect is also startling, with the number of players using black market sites and the value of wagers placed both doubling in a period of between one and two years.

Despite this and the immense threat posed by black market operations (both to problem gamblers and the industry as a whole), however, there appears to be minimal focus on this space.

Instead, regulators remain focused primarily on legislating the licensed iGaming market, with this type of tunnel vision potentially causing a more significant issue down the line.

Why is This Such an Issue for the Marketplace?

There are two primary issues with this oversight, whether it’s caused by complacency or a simple failure to recognise the scale of the problem.

Firstly, the illicit sites that are growing in popularity aren’t bound by stringent licensing terms, which means that they have none of the regulated sector’s consumer protections (such ID and age verification checks) in place.

Additionally, they fail to make provisions for responsible gambling practices or allow players to set deposit limits, creating a wild west type of environment where players are increasingly at the mercy of compulsive gambling behaviour and fraudulent operators.

Not only does this provide a clear threat in itself, but there are also fears that the regulatory approach taken by the UKGC and the government is actively driving players into the arms of various black-market operators nationwide.

The BGC noted this when addressing the Gambling Commission, claiming that the regulator’s ongoing consultation on further affordability checks and the potential introduction of a maximum £100 for customers (prior to providing evidence that they can afford to wager) could tip the balance in the licensed market and lead players directly to the black market.

These fears are also being compounded by the proposal of a £2 stake limit on virtual slots, along with the recent move to reduce the pace of slot gameplay and remove the sights, sounds and sensory interaction that can encourage individuals to bet more even as they accumulate losses.

Make no mistake; the combination of these restrictions could be viewed as being overly intrusive or detrimental to the typical iGaming experience, encouraging players of all descriptions to seek out less onerous platforms in the black market.

With this in mind, both the government and the regulator are being urged to acknowledge the detail of the PWC report, which reveals the size of the black market in the UK, its rapid growth and appeal in the eyes of players on these shores.

They’re also being asked to recognise the fact that online black markets tend to be larger in countries where regulated betting is less competitive, which is increasingly the case in the UK.

The Last Word – Is the Current Regulatory Approach Counterproductive

On a final note, there are also huge concerns that the current regulatory approach and stringent focus on verification and affordability checks could prove counterproductive in the quest to protect problem gamblers, despite their well-intentioned and considered nature.

After all, by creating a stringent and restrictive licensed space and allowing the black market to grow unfettered, regulators are providing problem gamblers with an opportunity to fulfil their favourite pastime without having to adhere to any spending limits or ongoing affordability checks.

This is a particular issue for problem gamblers who have yet to recognise the danger posed by their behaviour, as these individuals are preoccupied with wagering their cash and accessing as many markets as possible.

This isn’t to say that regulators should relax its laws for licensed operators or refrain from sanctioning brands that fail to adhere to responsible gambling and anti-money laundering legislation.

Instead, there’s a pressing need to tackle the black market and close this to the public as soon as possible, while simultaneously creating a safe and viable licensed space where vulnerable gamblers are protected from harm.

This will require recognition of the issue and a true desire to act, however, so both the UKGC and the government would do well to heed these warnings sooner rather than later.