Stark numbers from both sides of the globe are continuing to emerge as the size and reach of the black market is revealed.

A report from H2 Gambling Capital for Responsible Wagering Australia (RWA) estimates Australia’s gambling market is leaking AU$3.9bn (£1.9bn) a year to illegal sites, with this figure expected to rise to AU$5bn (£2.5bn) by 2029.

Meanwhile, the EU’s black market is now worth an estimated €80.6m in gross gaming revenue, more than double the legal market’s €33.6bn.

This is according to a Yield Sec report commissioned by the European Casino Association (ECA), which has laid bare the “systematic theft of revenue and abuse of regulation and consumer protections” by illegal operators across the European Union.

‘Systematic theft of revenue’

Diverting funds away from the regulated market comes at a major cost to both operators and the economies they exist in.

Using a blanket tax rate of 25%, Yield Sec suggests that the EU’s 27 member states are losing out on over €20bn in tax revenue each year.

This figure has widely been touted as the tipping point for taxation, whereby the scales truly begin to weigh in favour of the black market and against the regulated industry.

Similarly, in Australia, the black market is expected to cost the government almost $2bn in lost revenue over the next five years, and almost $800m in lost product fees to sport and racing.

“Illegal online gambling is not a marginal issue; it is an economic and societal threat. Every euro lost to criminal operators is a euro stolen from European citizens, from legitimate and licensed businesses, and from our communities,” said Erwin van Lambaart, Chair of the ECA.

Lack of consumer protection

More concerning for bodies such as the ECA and RWA is the impact of the black market on consumers, given that such operations do not have to adhere to the same regulatory standards as licensed operators.

“Unlike licensed operators, who use data to identify and support at-risk customers, illegal sites use it to target vulnerable Australians and minors with high-risk offers and exaggerated bonuses,” explained RWA’s CEO, Kai Cantwell.

“Australia’s world-leading consumer protections are only effective if people stay within the system, and right now, it’s too easy to bypass them offshore with a few clicks.”

The report from Australia notes that 50% of Australians who gambled offshore have done so after registering with the country’s self-exclusion register, BetStop.

These figures align with figures from the UK, where Gamstop found that 8% of its users have bet with unlicensed operators, and many websites target users by marketing themselves as ‘non-Gamstop casinos’.

According to the ECA’s report, unlicensed operators “exploit” online advertising channels to reach vulnerable customers and impersonate licensed casinos using their logos and imagery.

Keep it competitive

In Australia, better odds (48%) and bonuses (44%) were the most commonly cited reasons for players to stray to the offshore market. However, the survey also noted that live in-play betting, an offering prohibited by Australia’s gaming rules, was an influential factor.

According to Cantwell, this highlights that it is “essential” that Australia’s regulated market remains competitive.

“If people can’t find the products or prices they want here, they don’t stop gambling, they just go offshore,” he added.

H2 Capital’s report calls for stronger enforcement backed by “sensible onshore regulation and cooperation from industry, banks, tech platforms and sport” to “cut off the lifelines that keep illegal operators in business”.

It also recommends the formation of a National Illegal Gambling Blacklist Platform (NIGBP) and the integration of the National Self-Exclusion Register with payment monitoring systems to block transactions for BetStop-registered individuals to operators listed on the NIGBP.

“A strong, consistent national framework will protect Australians, preserve funding for sport and racing, and ensure initiatives like BetStop aren’t undermined by unregulated offshore sites,” concluded Cantwell.