A new report by Regulus Partners, presented at the SBC Summit in Lisbon, has shed light on the alarming rise of black market gaming operators and called for urgent governmental action. Supported by Entain, the report warns of substantial consumer risks and significant tax losses associated with unlicensed gambling, both in the UK and globally. The detailed research points to an estimated £335 million ($448 million) tax gap over the next parliamentary term for the UK alone. Additionally, it highlights how the black market thrives in other major economies like France and Germany, where up to 60% of gambling revenues are funneled into unlicensed operators’ hands.
The Tax Impact of Black Market Gambling
According to the Regulus Partners report, the unchecked rise of black market gambling operators could result in the UK Exchequer facing a tax shortfall of up to £335 million over the next few years. This figure builds on findings from Frontier Economics, which earlier reported that unlicensed operators cause an annual £70 million loss in tax revenue for the UK alone. Such losses aren’t just financial—they reflect a broader societal impact. When black market operators siphon money away from the regulated sector, essential services that rely on government funding, such as healthcare, education, and infrastructure, feel the strain.
The UK is not the only country facing these challenges. In markets like France and Germany, the share of gambling revenue captured by unlicensed operators has reached alarming levels, with up to 60% of total revenues being diverted into the black market. The report notes that in France, nearly 45% of all gambling revenue comes from the black market.
This level of tax evasion, combined with the associated crime and consumer harm, has led to increasing calls for governments to take more decisive action. According to Barry Gibson, Chair of Entain, “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.”
Regulatory Restrictions
The Regulus report points out that bans or heavy restrictions on popular gambling products, such as online casino games or sports betting, can inadvertently push consumers toward unregulated alternatives. When players cannot access their preferred gambling products through legal means, they often turn to unlicensed operators that do not abide by restrictions or player protections.
Appeal of Higher Returns
Black market operators often lure players with the promise of better odds, higher payouts, or bonuses that are not available through regulated channels. These operators can offer more lucrative returns because they are not subject to the same taxes or compliance costs as their legal counterparts.
Ease of Access
The internet has made it easier than ever for consumers to access black market gambling sites. These operators are often based offshore and operate without adhering to local laws, making it difficult for regulators to control their reach. Furthermore, the anonymity provided by online transactions enables players to engage in illicit gambling without fear of repercussions.
Lack of Awareness
Many consumers are unaware of the risks associated with black market gambling. These operators do not provide the same safeguards that licensed operators are required to offer, such as age verification, responsible gambling tools, or measures to prevent money laundering and fraud. The absence of such protections leaves players vulnerable to exploitation.
Consumer Protection Risks
The risks posed by black market operators extend far beyond financial loss. Since these operators are unregulated, they often lack the measures needed to protect consumers from harmful gambling behavior or fraud.
Lack of Age Verification
Unlike licensed operators, black market sites often fail to verify the age of their users, making it easier for minors to gamble.
Absence of Responsible Gambling Tools
Licensed operators are typically required to offer tools such as self-exclusion, deposit limits, and reality checks to help players gamble responsibly. These tools are rarely present on unregulated sites, leaving consumers at risk of developing gambling addictions.
Fraud and Unfair Practices
Players on black market sites have little recourse if they fall victim to fraud, as these operators do not follow legal processes or offer player protections. In many cases, winnings may not be paid out, and disputes are difficult or impossible to resolve.
Proposed Measures to Counter Black Market Gambling
The Regulus report does not simply highlight the problem—it offers several actionable solutions to curb the influence of black market operators. These countermeasures are designed to protect consumers, reclaim lost tax revenue, and ensure that gambling remains a safe and regulated activity.
Blocking Payments to Unlicensed Operators
One of the most effective ways to prevent consumers from accessing black market gambling sites is by blocking payments to these operators. Regulus proposes working with payment service providers (PSPs) to ensure that transactions with unlicensed operators are stopped before they can be processed. However, this must be done without disrupting legitimate transactions, ensuring that consumers who choose to gamble on licensed platforms can do so without interference.
Imposing Advertising Restrictions
The report recommends implementing strict controls on mainstream and social media advertising for black market operators. These operators often exploit digital platforms to target consumers with attractive offers, so limiting their advertising reach could significantly reduce their influence.
Using the Online Safety Act
The UK’s new Online Safety Act presents an opportunity to restrict access to black market gambling sites. Regulus suggests using this legislation to block IP addresses associated with unlicensed operators, making it more difficult for consumers to find and access these sites.
Increasing Criminal Enforcement
Law enforcement agencies should take a more proactive role in combating black market operators. By increasing criminal enforcement efforts, governments can alter the risk-reward balance for those working outside legal frameworks, making it less attractive to operate in the black market.
Public Blacklists
Another key proposal is the establishment of a public blacklist of unlicensed operators. This would serve as an educational tool for consumers, helping them to identify and avoid unregulated sites. By raising awareness of the risks, governments can empower consumers to make safer choices.
The Role of Major Events in Driving Black Market Growth
The Regulus report comes in the wake of earlier concerns raised by the Betting and Gaming Council (BGC) regarding the surge in traffic to black market gambling sites during major events. In 2023, the BGC highlighted the sharp rise in unregulated gambling during the 2022 World Cup, with research from Yield Sec showing that visits to unlicensed sites tripled during this period.
Major sporting events often drive increased interest in betting, but when regulated operators are unable to meet consumer demand—either due to product restrictions or technical issues—players are more likely to seek out black market alternatives. This trend is particularly concerning because it undermines the effectiveness of regulations designed to protect consumers and ensure fair play.
Global Perspectives on Black Market Gambling
The black market gambling problem is not confined to the UK. Across Europe and other international markets, unlicensed operators are capturing an increasing share of gambling revenues. In France and Germany, for example, up to 60% of the market is now controlled by black market operators. This trend is mirrored in other countries with similarly strict regulatory environments, where players are drawn to unregulated sites that offer more attractive products and incentives.
The report stresses that a global response is needed to tackle the issue effectively. While individual countries can take steps to block payments or restrict access to black market sites, international cooperation will be essential to shut down the operators themselves. This will require collaboration between regulators, law enforcement agencies, and industry stakeholders across borders.
The Path Forward: Collaboration and Vigilance
The growing presence of black market gambling operators represents a clear and present danger to both consumers and governments. As unlicensed operators continue to capture market share and evade taxes, the need for stronger regulatory enforcement becomes increasingly urgent. The Regulus Partners report offers a blueprint for tackling the issue, but it will require coordinated action from governments, industry leaders, and consumers alike.
The gambling industry must continue to innovate and adapt its regulatory frameworks to ensure that legitimate operators can compete effectively while keeping players safe. Only through a combination of technology, law enforcement, and public awareness campaigns can the influence of black market operators be curbed. The fight against unlicensed gambling is not just a regulatory challenge—it is a matter of public safety and economic stability.
The data revealed by Regulus Partners underscores the need for a unified and proactive approach to combat the rise of black market gambling operators. By implementing the recommended measures, governments can protect consumers, recapture lost tax revenue, and preserve the integrity of the gambling industry for future generations.