SBC News BGC warns of 1.5m Brits active on black market websites

BGC warns of 1.5m Brits active on black market websites

The Betting and Gaming Council (BGC) has warned the government that unregulated black market gambling poses greater risks than perceived by British consumers. 

The trade and standards body for UK gambling sounds its caution, following a new study published by microeconomics consultancy Frontier Economics. – titled: “The size and economic costs of black market gambling in Great Britain

The study commissioned by the BGC is detailed as “the first major study on the black market since the publication of the previous Government’s White Paper on gambling reforms”.

UK gambling is recognised as a highly regulated sector, servicing 14 million adults (excluding the National Lottery) who gamble per month and generating £10.9bn in annual gross gambling yield (GGY).

Licensing duties see consumers protected by safer gambling rules, compliance monitoring, customer care interventions, responsible gambling tools, controls, and financial probity—overseen by the UK Gambling Commission (UKGC).

SBC News BGC warns of 1.5m Brits active on black market websites
Andrew Leicester: Frontier Economics

Andrew Leicester, Associate Director at Frontier Economics, 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 spending into unregulated providers who do not need to comply with regulations around safer play.”

Regulatory Blindspots 

Yet the study points to regulatory deficiencies in recognising the threat of the black market on UK gambling as “previous studies have found that the scale of unregulated gambling in Britain—loosely termed ‘black market’ gambling—is small”. 

British authorities must recognise the evolving nature in which black market websites operate and are advertised to audiences on social media and messaging apps.

Access to illegal websites is deemed easier than ever via the growing use of Virtual Private Networks (VPNs), which allow users to navigate the web privately. As such, illegal operators can promote their offers via social media and messaging apps, including ‘crypto casinos’ – a banned category in the UK.

Undertaking a first-of-its-kind study, Frontier Economics “drew on survey evidence from more than 6,000 people to understand whether and how people are accessing black market gambling”. Research was combined with a “nationally representative panel of the population, to help capture those players who are already fully converted to unregulated play”.

The study finds that the black market runs parallel to a highly regulated UK gambling sector, offering unrestricted play, no verification requirements, and anonymity as key drivers for customers to gamble illegally. Of concern, feedback noted the ease with which illegal websites were advertised to players via affiliate websites “promoting ‘non-GAMSTOP’ status, appealing to those seeking alternatives to regulated platforms”.

The coverage and ease of promotion of illegal websites were detailed as an area of heightened concern, as “15% of gamblers who responded to our survey said they had heard of at least one of the black market sites listed. This is equivalent to around 2.8 million people”. 

Furthermore, feedback “confirmed that sponsorship is an important driver of awareness of black market operators,” as detailed by 13% of survey respondents, second only to social media adverts (22%) as a primary driver of awareness.

SBC News BGC warns of 1.5m Brits active on black market websites

Unaccountable Impacts…

Estimating the size of the Black Market, research deems that one-in-12 gamblers use black market sites or social media/messaging apps for some or all their gambling activities, equivalent to 1.5 million people. As such, the total volume of the black market stake could be conservatively estimated at £2.7bn annually, which constitutes approximately 2.1% of the £128bn staked on regulated businesses (online + land-based) in the UK.

The £2.7bn estimate is broken down as follows: £262m comes from players who exclusively use black market online operators, and £433m is generated by those who only gamble through social media or messaging platforms like WhatsApp. The remaining £2bn is contributed by players who engage in “splitting their gambling activities between black market and UK-regulated operators”.

The exposure and expenditure of black market activities is likely to grow as 65% of black market spending comes from players aged 18-34, and 58% of the stakes come from players who spend more than £800 per month. 

Furthermore, research underscores that black market gambling maintains a long tail of unregulated operators that are hard to capture in estimates, which likely understate the size of the black market and its present threats.

Elsewhere, authorities cannot ignore the economic impact of illegal gambling as researchers found that 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—approximately a tax deficit of £39m per year.

The BGC notes that lost excise duties to the black market could pay for additional public services, equivalent to up to 1,700 nurses’ salaries, or up to 1.2 million extra GP consultations, or up to 1,500 teacher salaries.

SBC News BGC warns of 1.5m Brits active on black market websites
Grainne Hurst: BGC
BGC calls for actions beyond enforcement 

BGC members will continue to support the UKGC in helping combat illegal gambling and better understand what drives consumers to gamble illegally—helping the Commission fulfil its regulatory objectives of safeguarding UK consumers.

BGC CEO Grainne Hurst said: “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.”

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