Shock new study reveals 1.5m Brits stake up to £4.3bn on illegal gambling black market each year
- Black market gambling online has “high awareness, is easy to find, and is already commonly used”, says new report
- £2.7bn staked on illegal, unregulated gambling black market sites online
- Up to £1.6bn staked in underground gambling venues
- One in five 18-24 year olds who bet have gambled with the black market, survey says
- Black market aggressively advertising to young people and problem gamblers
- Standards body representing 90 per cent of regulated betting and gaming sector says balanced regulations best defence against the black market
A major new study has found 1.5m Brits stake up to £4.3bn on the growing, unsafe gambling black market each year.
The report published today by leading consultants Frontier Economics, and commissioned by standards body the Betting and Gaming Council, is the first major study on the black market since the publication of the previous Government’s White Paper on gambling reform.
It found illegal operators are aggressively targeting UK customers, significantly undermining player protections, while sucking millions from sport and the Treasury.
According to the research more than one in five 18-24 year olds who bet already use the unsafe, unregulated gambling black market online, and via secure online messaging apps.
Meanwhile, outfits based overseas aggressively target customers who have self-excluded from regulated betting operators.
Researchers found the vast sums bet on the gambling black market online and offline could deprive the Treasury of up to £335m over the course of a five-year Parliament, if action is not taken.
Annually, that is the equivalent of up to 1,700 nurses salaries, or up to 1.2m extra GP consultations or up to 1,500 teacher salaries.
While £2.7bn is staked on illegal sites online – impacting every area of betting and gaming from online poker to horse racing - the study suggested up to a further £1.6bn could be being staked in-person at illegal gambling dens.
Standards body the BGC said balanced regulations and stable taxation is the best defence against the black market.
Betting and Gaming Council CEO Grainne Hurst, said: “This shocking report exposes the unnerving true scale of the growing, unsafe, unregulated gambling black market.
“From online gaming, to betting on sports like horse racing, millions of customers are being driven into the arms of pernicious black market operators. These people don’t care about player safety, don’t want to pay their fair share to support sport and don’t pay a penny in tax.
“By failing to adhere to the stringent standards set by the Gambling Commission, unregulated operators in the unsafe black market can make bigger offers, grant customers total anonymity, and promise the freedom to gamble without any controls or safety measures, unlike BGC members.
“Worst of all, these sites are making a mockery of the rules set up to protect the most vulnerable by aggressively advertising their services to those who have self-excluded.
“The Government and the regulator risk sleepwalking into this issue. 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.
“The fact is onerous and ill-judged regulations drive customers from the regulated sector to the unsafe, unregulated gambling black market.
“Proposals by anti-gambling prohibitionists like advertising bans or intrusive, blanket, low level affordability checks will not protect customers, in fact they will give another leg up to unscrupulous black market operators, the last thing anyone wants.
“Every comparable market in the world tells us the same thing. The best defence against this growing illegal, gambling black market is getting the balance of regulations right.”
Andrew Leicester, Associate Director at Frontier Economics and one of the report’s authors, said: “This report shows that most gambling today is done through regulated, visible channels. That is good news.
“But there are warning signs. The landscape is evolving quickly in ways that suggest black market gambling is getting easier to find and access.
“This report provides timely new evidence on the scale of the black market. Efforts to make gambling safer are important, but must avoid the risk of simply pushing more players and spend into unregulated providers who do not need to comply with regulations around safer play.”
Separate studies have shown European countries which deploy draconian regulations on betting, see a surge in unregulated gambling.
Restrictions in Norway resulted in a black market that now accounts for over 66 per cent of all money staked.
Another report found that in Bulgaria 47 per cent of money staked goes to unregulated gambling, in Portugal it is 31 per cent. Both countries face high rates of gambling taxes.
Last year’s White Paper urged the Gambling Commission (GC) to improve its knowledge on the black market, so more could be done to limit its reach.
In total, the research revealed 15 per cent of those who regularly bet – around 2.8m people – had heard of at least one online black market site.
The BGC has previously called on internet giants to cooperate with our members in the regulated market to prevent the growth of online black market gambling.
Illegal sites peddle crypto gambling and gambling with credit cards, and even mimic regulated sites to the point that over half of players (54 per cent) were unaware they were even using unregulated operators.
The report also uncovered the wide use of VPNs – or Virtual Private Networks – used to mask a customer’s true location so they can access unregulated gambling outfits operating overseas.
Meanwhile, a worrying number of customers “multi-home”, conducting betting on regulated and unregulated sites, posing more risk to the regulated market.
Current attempts to prevent the growth of the online black market have proved unsuccessful as illegal operators can easily rebrand or create new identities to evade detection and continue operating.
All BGC members are regulated by the Gambling Commission, meaning they meet stringent standards.
They offer player protection measures and safer gambling tools as standard, including deposit limits, time-outs and self-exclusion through GAMSTOP.
They must also meet strict data protection rules, comply with anti-money laundering regulations, meet fair play requirements, abide by strict advertising rules and pay tax.
In addition, BGC members and GC regulated licensees have voluntarily donated £172.5m over four years to tackle problem gambling and gambling related harm.
This is on top of their significant economic contribution.
According to a separate report, BGC members contribute £7.1bn to the economy and generate £4.2bn in tax while supporting 110,000 jobs.
The regulated betting and gaming industry also provides some of the country’s most popular sport with vital funding.
Horse racing benefits to the tune of £350m a year, while the English Football League and its clubs receive £40m, and snooker, darts and rugby league receive more than £12.5m.
Each month around 22.5 million people in Britain enjoy a bet and the overwhelming majority do so safely and responsibly.
The most recent NHS Health Survey for England estimated that 0.4 per cent of the adult population are problem gamblers.
Frontier Economics’ study was based on a large-scale survey of more than 6,000 people plus additional data supplied by BGC members.
The full report can be read here.
