Governments need to act decisively to address the growing challenge posed by black market gaming operators, according to a new report from Regulus Partners. Commissioned by Entain, a leading FTSE 100 sports betting group, the report suggests a range of policy actions to combat unlicensed operators and close tax loopholes in the UK and globally.
In the UK alone, black market gambling could lead to a tax shortfall of up to £335 million ($448 million) over the next parliamentary term. Research from Frontier Economics puts the annual tax loss at £70 million ($93 million), with the risk of that figure increasing without intervention.
Other countries like France and Germany also face substantial revenue losses due to black market gambling. In France, 45% of gambling revenue goes to unlicensed operators, while Germany sees 60% lost to illegal platforms. Regulus Partners points out that restrictive regulations in these countries have driven players to illegal sites, exacerbating the issue.
To combat this, the report outlines five key strategies: blocking payments to unlicensed operators, limiting their advertising, blocking their IP addresses, enhancing criminal enforcement, and creating a public blacklist to educate consumers.
Barry Gibson, Entain’s chair, spoke on the importance of tackling the issue during the SBC Summit in Lisbon. “Taking on the black market operators should be a key priority for policymakers around the world. It will tackle crime and raise money which could be spent on critical areas such as healthcare, education, and infrastructure,” he said.
Gibson also warned about the risks of focusing solely on tax increases without addressing illegal operators. “If we go down the route of further tax increases rather than tackling the black market, it will drive even more customers towards unscrupulous operators,” he added.
Although the UK has a well-regulated gambling market, participation in black market platforms is growing, especially among younger players. Those under 35 are twice as likely to gamble on unlicensed sites and make up two-thirds of the total stakes placed in the black market.
The issue is not new. The Betting and Gaming Council (BGC) had previously raised concerns about the rise in traffic to unregulated sites during major events like the 2022 World Cup. Data from Yield Sec showed that visits to black market sites tripled during the tournament.
The Regulus report stresses that regulatory measures must be paired with appealing legal gambling options. “Legal and regulatory countermeasures can be highly effective as long as the domestically regulated product offer remains attractive,” the report concluded.
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