UK gambling policy imbalance has caused open pathway to black market

Deal Me Out’s Black Market Report calls on major rethink of player prevention strategies against the encroachment of illegal online gambling operators.

The UK needs to reassess how it approaches black market gambling as independent research suggests that a significant number of British players are engaging with unlicensed websites, due to unforeseen regulatory circumstances.

Deal Me Out (DMO), a gambling harm prevention and education organisation, published a report this week examining the extent of a gambling black market in the UK. DMO insights seek to provide the perspective of those who have those who have engaged with unlicensed operators and provide an understanding of vulnerabilities and why individuals engage with black market websites,

The organisation has reiterated an argument made by various industry stakeholders from operators to charities for the past few years, particularly during the review of the 2005 Gambling Act – that a gambling black market is very active in the UK and is being used by more consumers than is currently believed.

According to DMO’s report, based on a survey of 1,250 children, 300 adults, and 10 gambling content creators, the UK black market has received more than £10m in deposits from adult consumers alone.

This is of course not factoring in many underage people who may gamble on unlicensed sites, which will not adhere to the age verification requirements imposed by the UK Gambling Commission (UKGC).

“This report provides a much needed update on the impact that the black market has on those living with gambling harms,” said Matthew Hickey, Founder of Social Intent, which worked on the report with DMO.

“The impact that over regulation can have on driving people into the black market and further away from help and support that is on offer currently is evident in this report, and something that we must stop happening.”

Out of the frying pan, into the fryer

Unsurprisingly, the research found that players who bet with black market gaming sites often come across a lot of ‘underhand tactics’ and are at a substantial risk of harm, both financial and emotional.

As stated above, of the £10m staked on gambling sites, £3.6m was staked by individuals with gambling addiction, £1.9m from general consumers, and £5.1m from 10 content creators paid to promote black market sites.

The statistic that may be ringing the most alarm bells though is that 61% of respondents said that they had money stolen from them when trying to withdraw winnings. Additionally, it also appears that black market firms are actively targeting self-included bettors to continue gaming.

DMO states that 67% of respondents told them that they were self-excluded via Gamstop from licensed betting sites – the Ladbrokes, Corals, Paddy Powers and bet365s etc of the UK gaming sector – but continued gambling with black market firms.

This included people who could be classified as financially vulnerable, a demographic which has been a particular focus point of UK regulatory changes in recent years. The adoption of financial risk checks in the Gambling Act review is arguably the best example of this.

According to DMO’s survey, people on universal credit have been gambling on the compliance-light black market. In one notable case, a Universal Credit claimant deposited “£129,000 on a black market site within two weeks”.

How do black market firms market themselves?

In addition to financial vulnerability, marketing and promotions have been a big topic of debate in UK gambling circles over the past few years. This has included sports sponsorship and general sports marketing, advertising in public places and on social media, emails and direct messaging, and bonuses.

Some of the more notable rule introductions lately included giving consumers the right to opt-out of marketing messages from companies when setting up accounts. Another more recent one saw bonuses requiring customers to stake across more than one vertical (betting, casino, lotteries, bingo etc).

These rules, particularly the latter, have been broadly welcomed by the industry professionals SBC News has spoken to. However, it is also true that black market firms are not subject to these rules and will continue to do so, leading to an imbalance between them and the licensed firms.

Over 70% of DMO respondents said that they were receiving marketing and VIP offers in the form of emails and texts from black market firms on a daily basis. They added that there was nothing they could do to stop these communications, unlike the opt out options of the regulated industry.

Of most significance though is the role of influencers. The marketing role online personalities play in promoting illegal gambling is of particular concern to DMO and Social Impact, the charities’ report outlines.

The duo found that 84% of content creators externally reviewed during its research were promoting black market sites, with one gaining over one million views in a single month.

Nine out of 10 of these influencers were found to be promoting BC Game, a sponsor partner of Premier League club Leicester City FC, amidst the firm being declared bankrupt, losing its Curaçao operating licence and seeing its UK white label deal ended.

Can regulation balance the books?

Regarding the product itself, the appeal of black market sites may also be rooted in the fact they offer the same product as licensed ones but without as much compliance and regulatory red tape.

Black market sites feature games from UK-licensed providers like Hacksaw and Evolution as well as extensive sports betting markets. They also offer a range of payment options to increase reach including in-game currencies, fiat currency and cryptocurrency.

The inclusion of in-game currency and crypto, which combined are by far the most common payment methods on these sites, also enables customers to better mask transactions and hide their financial vulnerability – though not from black market firms, which pay no mind to this, more from their banks or payments providers. DMO views crypto as a regulatory blindsport that requires addressing by UK authorities.

Levelling the playing field between the legal and illegal has been a challenge for the UKGC and other regulatory stakeholders for years, and is one which is not going anywhere. In DMO’s view, regulatory changes of late may have exacerbated the black market.

Respondents told the charity that they used the black market as a means of getting around regulations, particularly to bet with larger sums of money and circumvent deposit limits and access bonus buys and turbo spins.

Regarding the aforementioned topic of finance risk checks (or affordability checks as the measures have otherwise been called), DMO states that some consumers are concerned about giving personal details to gambling firms. This is either due to a personal objection to ‘nanny stating’ or an awareness that they would fail finance checks and be blocked from gambling.

“We are seeing a significant rise in crypto casinos, fake games, and VIP schemes promoted by influencers who bypass UK regulations,” said Jordan Lea, CEO of Deal Me Out.

“The consequences of well-intentioned regulation must be considered carefully, or we risk pushing vulnerable consumers straight into the arms of the Black Market.

“We need to ensure regulators, policy makers, industry and all other stakeholders work collaboratively to prevent any further growth of illegal gambling.”

It is clear that the black market remains a consistent threat to UK customers, and the fact that many of these sites are not always easily distinguishable from the regulated offering further complicates matters.

The timing of this conclusion comes as gambling continues to face regulatory and political pressure even as the recommendations of the Gambling Act review are being adopted – just last week, 38 local councils across the UK called for more powers to block industry expansion and marketing in their areas if they wished.

However, it is also important that the regulated industry does not lose sight of its own responsibilities.

While the black market may have no checks or balances at all, players in the legal space still come up against harm and are at risk of problem gambling, and at a time of heightened public and political pressure on legal gambling the industry cannot just shift the buck and rely on the argument that the black market is a worse alternative.