The UK Gambling Commission (UKGC) is examining whether certain operator practices and policies may drive customers towards illegal, unregulated websites.

The regulator has published a report, the first in a planned series diving into the extent of illegal gambling in the UK, coming at a time of extensive political and regulatory debate.

This report is an important milestone for the industry as it is a clear acknowledgement from the regulator that a black market does exist after years of debate.

“The illegal online market is unsafe, unfair and criminal – that is why the Commission has invested heavily in this area in recent years,” said Andrew Rhodes, CEO of the UKGC.

British licensed companies have been raising alarm bells over black market betting for some time, with the Betting and Gaming Council (BGC) trade body particularly vocal.

The often heated debates around gambling regulation, particularly during the Gambling Act review, sometimes saw the industry accused of overplaying the prevalence of a black market.

However, the regulated industry is not escaping criticism in the report. The UKGC states that it is undertaking research to find out whether ‘regulatory and operator practices’ may contribute to customers moving to black market firms.

This comes just a couple of months after the Commission announced a review into the types of commercial restrictions operators place on customers, having found that some covering 15 million accounts are restricted in some way.

The report is also self-critical though. The Commission has mentioned financial vulnerability checks, for example, as an example of how regulatory practices could influence whether or not a customer bets with the black market.

This may be received with frustration by segments of the industry or perhaps as a sign of vindication by others, or maybe a combination of both, as regulated companies expressed concern for many years that affordability check-style measures could have this impact.

Why bet with the black market?

Overall though, nothing is concrete. The UKGC has identified a number of areas to conduct further research on to fully understand the extent of black market activity in the UK and how it affects customers.

It has not yet been made clear where many of the illegal sportsbooks and casinos targeting British customers come from, for example. This is a notable contrast from regulatory reports into the black market from other countries, such as Sweden, where authorities identified Curaçao as a prominent source of offshore casino activity.

The regulator believes that it has identified some motivating factors which drive customers to the black market, aside from the potential of operator and regulatory practices.

These include product diversity, with some gambling products available on the illegal market that are not in the UK – crypto betting may be a big example of this, with the Commission also noting that some customers may be on the hunt for the option to use digital payments.

Similarly, customers may be in search of better odds, offers and bonuses. There are some more insidious motivations, however, with some customers potentially wanting to avoid the stake and spending limits set by the regulated industry.

These customers are more likely to be the ones suffering from gambling harm. The same customers may also be the ones who head to the black market to circumvent self-exclusion schemes they may be signed up to, most notably GAMSTOP.

A quick google search will find various examples of offshore companies brazenly describing themselves as ‘non-Gamsop casinos’ or similar terminology. There are also various affiliate platforms out there that market these platforms, causing a headache for regulated operators, the UKGC, harm treatment and prevention organisations, and the customers themselves.

Finally, the UKGC also notes that many customers are unfamiliar with what the differences between a regulated and unregulated firm are. As many offshore firms try to disguise themselves as regulated ones, using UKGC and GambleAware logos for example, this is not too surprising.

What can be done?

First and foremost, to tackle illegal gambling the UKGC states that it needs to build up its evidence base first – which is the very purpose of its black market report, as stated the above the first in a planned series.

The Commission states that it will conduct further research including widespread data collection via the Gambling Survey for Great Britain (GSGB), which is already used to determine the extent of problem gambling in the UK.

The regulator has also identified a need for a deliberative approach in its future research to focus on how both its own practices and policies and those of operators may push customers to black market firms.

Lastly, it also evaluating whether to launch a consumer facing campaign. Given that it seems many consumers are unaware of the risks of using black market firms or are unaware of how to identify them, this idea is not without merit.

Rhodes concluded: “To be even more effective in combatting the illegal market it’s vital that we have both a deep and broad understanding of how it operates, and this insight is a crucial step in building that understanding in a very complex area to research.

“We are determined to protect consumers and maintain confidence in the regulated sector by taking robust, evidence-led action. Since April 2024 we’ve seen a ten-fold increase in our disruption activity, and we intend to continue to work with a wide range of partners to build on this success.”