A recent survey, commissioned by the Betting and Gaming Council (BGC), has revealed that an estimated £2.7 billion is wagered each year in the UK through black market gambling operators. The findings, presented in a report by Frontier Economics, indicate that this illicit gambling accounts for 2.1% of the £128 billion staked with licensed online operators. This study marks a critical moment in understanding the rise of illegal gambling in the UK, particularly in the wake of the government's white paper on gambling reform, which was published in May 2023.
The survey’s revelations have prompted alarm among industry leaders. BGC CEO Grainne Hurst expressed grave concern over the findings, describing the scale of illegal gambling as both “unnerving” and “unsafe.” In her statement, she warned that the UK government and regulatory bodies were at risk of "sleepwalking into the issue" of unchecked black market gambling.
Hurst emphasized that the UK Gambling Commission (GC) alone cannot fully combat this issue. She stated, “Simply giving the GC more powers and more resources to tackle the black market won’t in itself, work. Enforcement is only part of the solution.” Her remarks suggest that broader regulatory changes may be needed to adequately address the growing threat posed by unlicensed gambling operators.
Among the more concerning aspects of the survey’s findings are the potential financial implications for the UK government. The report highlights that up to £335 million in tax revenues could be lost annually due to the growing prevalence of black market gambling. This figure extrapolated over the course of a five-year parliamentary term, would amount to over £1.6 billion in lost revenue.
The survey also revealed that 5.4% of those surveyed had used both licensed and illegal gambling sites, with 0.8% exclusively using black market platforms. This dual use of legal and illegal gambling sites underscores the scale of the problem. The report estimates that around £2 billion is wagered annually by individuals who use both types of operators, while an additional £695 million is spent solely on illegal platforms.
Another key insight from the report is the role of social media in promoting black market gambling. The study found that 22% of respondents had encountered ads for illegal gambling sites on social media platforms, making it the most common medium for black market advertising. Sports sponsorships and online advertisements each accounted for 13% of respondents' exposure to illegal gambling brands, while streaming platforms and affiliates contributed to 10% and 9% of exposure, respectively.
The intelligence platform Yield Sec, which tracks black market gambling globally, highlighted the proliferation of illegal gambling advertisements during major sporting events, such as the Olympic Games. Their data revealed that up to 46% of all illegal streams carried these ads, suggesting a coordinated effort to target sports fans through unregulated channels.
While the rise of online black market gambling is alarming, the report also noted that illegal gambling in-person remains a significant issue. Of the respondents, 4.4% admitted to participating in illegal in-person gambling, contributing an estimated £1.6 billion to the total size of the black market, which the report claims could be as large as £4.7 billion annually when both online and in-person activity are combined.
The study provided valuable insight into why certain gamblers are drawn to illegal operators. Among the primary incentives were better bonuses and free bets, with 35% of respondents citing these factors as key motivations for using unlicensed sites. This was closely followed by the ease of setting up an account (32%) and the availability of more flexible payment options and better odds, each cited by 30% of respondents.
Interestingly, the survey highlighted a generational divide in awareness and use of black market operators. Among those familiar with illegal gambling brands, 38% were aged 18 to 24, with this percentage steadily decreasing among older age groups. Similarly, the percentage of individuals actively using illegal gambling sites was highest in the 18 to 24 demographic (16%), again showing a decline with increasing age.
The methodology of the survey also raises questions about the full extent of the black market’s reach. According to Frontier Economics, 5.8% of respondents reported using a Virtual Private Network (VPN), which complicates efforts to track illegal gambling activity. Additionally, 2.9% of respondents exclusively named black market operators, while another 2.9% said they gambled through social media or messaging apps. The use of these less visible channels highlights the challenges of accurately estimating the full scale of the black market.
Frontier Economics did acknowledge that their estimates may be conservative, as the survey included high-stakes players, who are more likely to engage with illegal operators. However, the overall trend points to a significant and growing problem within the UK gambling landscape.
The BGC’s 2019 report, conducted by PWC, had already shown that black market spending had doubled since 2018. With the most recent findings, it is clear that illegal gambling continues to be a significant issue, one that poses a threat not only to regulated operators but also to public safety and government revenues.
As the UK continues to grapple with the impacts of illegal gambling, it remains to be seen how effective future regulatory efforts will be in curbing the black market’s growth.
Source:
''BGC survey predicts £2.7bn bet annually on UK black market'', igamingbusiness.com, September 19, 2024.