SBC News Ulrik Bengtsson: Claiming the black market doesn’t exist is like saying the Earth is flat

Ulrik Bengtsson: Claiming the black market doesn’t exist is like saying the Earth is flat

William Hill Group CEO Ulrik Bengtsson has warned UK lawmakers that they should be very wary not to open up the door to black market operators as the 2005 Gambling Act review kicks into its next gear. 

The deadline for submissions to the DCMS consultation on the gambling laws is today, and Bengtsson is hopeful that those behind the review don’t take the threat posed by unlicensed operators too lightly.

He is also scathing of those who argue that the black market is not something to be concerned about and is a phantom bogeyman to make sure restrictions aren’t too harsh. 

“There are people in the anti-gambling lobbying regimes that seem to deny that the black market exists,” he told SBC News. “To me that’s sort of saying that the Earth is flat. It’s very clear that there is a black market for gambling and I think anyone should be worried by the fact that the numbers have doubled in about a year.”

Here Bengtsson is citing the PwC Review of Unlicensed Online Gaming in the UK report published last week that saw a ‘sizeable increase’ in both the number of players using black market sites (210,000 to 460,000) and the amounts wagered (£1.4bn to £2.8bn) within a two year period. 

He personally followed that up with a statement to the market specifically pointing out some of the other markers of the growing influence of unlicensed activity in the UK. “We just need to realise that this is real and this exists,” he explained. “These figures appear to have increased because of the tighter regulations introduced over the last couple of years.

“When you make changes that this review will bring, you have to get them right. Otherwise it will not be to the benefit of the customer, it will not be to the benefit of the operators and will not be to the benefit of the government.  You’ve got to get it just right so that everyone lands on their feet on this one, most importantly the customers because they are not protected at all outside of the regime.”

Bengtsson said that the industry’s lobbying around the black market doesn’t mean that there should be no changes in the gambling regime. “We are very supportive of the review,” he said. “An evidenced-based and sensible review we think can be very good for the industry. 

“I do realise we have a huge obligation to make sure our customers play within their means. We should do a reasonable amount of affordability checks, but it can’t be to the extent where it is so intrusive that we force these people out. So it’s all about finding the right balance to keep the customers in the UK ecosystem; to keep them safe, to secure the tax base and to secure the industry.”

The experience in Sweden demonstrates the fine line between good intentions and ineffective safeguarding. A recent report by the EGBA found 38% of the players who are on the country’s central self-exclusion database still manage to gamble with offshore operators. 

Bengtsson points out that this causes huge issues in terms of player protection and develops when regulations make licensed operators uncompetitive compared to those who operate in the black market. “No-one asks you any questions there. No one asks for payslips or checks identity. It’s just very dangerous.”

On the flip side of things, the experience in the US market which is undergoing its own roll out of sports betting regulation across the states, is seeing the influence of the offshore sportsbooks reduce. 

“They realised in the US that sports betting was already there, but it was being managed and run by companies who are not licensed, not under any control and don’t provide any tax revenues. They are finding that the best way to handle the product is to provide very tight and careful regulation where operators on the ground are allowed to service the population. That’s still the fundamental pillar of the UK regulation as well. Historically we have seen that just banning things is not going to work.”

Last year Bengtsson told the House of Lords that the UK has arguably been the most successful gambling regime in Europe given that the prevalence of the black market has been quite small up until now. “While the law makers need to be applauded for that, you need to be very careful that when you re-do the legislation that you don’t end up where most of the other regulators have ended – with up to 20% of the market being controlled by offshore companies.

“I think that will be a very, very bad outcome for this review and I don’t think that politicians, the treasury or the anti-gambling lobby want that. We don’t want that and neither do the customers. No-one wins in that scenario other than shady operators.”

As for how to police the black market, some of the laws in Sweden such as taxing offshore income are obviously not an effective deterrent to players. However Bengtsson believes more can be done on the industry side of things, 

“I’ve been a big advocate for the requirement for a licensing regime for affiliates in order to operate in the market and one for suppliers where they make guarantees that they don’t supply unlicensed operators. You have to licence the entire ecosystem – payment providers etc – in order to protect the players effectively. Then you need to have a functioning, and well-resourced, enforcement arm as well.”

Bengtsson maintained that his and his firm’s concerns around the black market are very real and need to be taken into account. “It’s not about shying away from further regulation and tightening up. It’s about getting the balance right and making sure we do this in the right way.”

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