UK Black Market Gambling: £2.7bn Annual Stakes and Tax Losses Unveiled

A comprehensive survey conducted by the Betting and Gaming Council (BGC) has disclosed that an estimated £2.7 billion is wagered annually in the UK via black market gambling operators. The findings, compiled in a report by Frontier Economics, reveal that these illegal gambling activities constitute 2.1% of the £128 billion staked with licensed online operators. This significant revelation comes at a critical juncture, particularly after the UK government's white paper on gambling reform, which was published in May 2023.

Alarming Findings and Financial Implications

The survey's outcomes have raised considerable alarm among industry leaders. Grainne Hurst, CEO of BGC, expressed serious concern over these revelations, describing the magnitude of illegal gambling as 'unnerving' and 'unsafe.' She cautioned that the UK government and regulatory bodies risk 'sleepwalking into the issue' of unchecked black market gambling.

Hurst asserted that the UK Gambling Commission (GC) alone is insufficient to tackle the problem. She stated, '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.' This indicates that broader regulatory changes might be necessary to address the growing threat from unlicensed gambling operators.

The financial consequences for the UK government could be severe. The report emphasizes that up to £335 million in tax revenues might be lost yearly due to the proliferation of black market gambling. Over a five-year parliamentary term, this would translate to over £1.6 billion in lost revenue.

The survey found that 5.4% of participants had utilized both licensed and illegal gambling sites, with 0.8% exclusively using black market platforms. This trend underscores the complexity of the issue, with approximately £2 billion annually wagered by those using both types of operators and an extra £695 million spent solely on illegal platforms.

Social media plays a crucial role in promoting black market gambling, with 22% of respondents encountering ads for illegal sites on these platforms. Sports sponsorships and online advertisements accounted for 13% each of exposure to illegal gambling brands, while streaming platforms and affiliates contributed to 10% and 9%, respectively.

The intelligence platform Yield Sec monitors black market gambling globally and noted an increase in illegal gambling ads during major sporting events, such as the Olympic Games. Their data indicated that up to 46% of all illegal streams featured these ads, suggesting a coordinated effort to target sports fans through unregulated channels.

Continued Prevalence and Insights into Motivations

Despite the surge in online black market gambling, the report also noted that in-person illegal gambling remains a significant concern. Around 4.4% of respondents admitted to participating in illegal in-person gambling, contributing an estimated £1.6 billion to the total black market size, which could be as large as £4.7 billion annually when combining both online and in-person activities.

The survey provided insights into why individuals might turn to illegal operators. Factors such as better bonuses and free bets, cited by 35% of respondents, were primary motivations. Other reasons included the ease of setting up an account (32%), more flexible payment options, and better odds (each cited by 30%).

There is a notable generational divide in awareness and use of black market operators. Among those familiar with these illegal brands, 38% were aged 18 to 24, with this percentage decreasing in older demographics. Similarly, the percentage actively using illegal sites was highest among the 18 to 24 age group (16%), diminishing with age.

The survey's methodology raises questions about the full extent of the black market's reach. Frontier Economics acknowledges that their estimates might be conservative, including high-stakes players more likely to engage with illegal operators. Nonetheless, the trend points to a significant and growing problem in the UK gambling landscape.

The BGC's 2019 report by PWC had already shown that black market spending had doubled since 2018. The latest findings indicate that illegal gambling continues to present a major challenge, threatening regulated operators, public safety, and government revenues. As the UK seeks to curb the black market's growth, the effectiveness of future regulatory efforts remains to be seen. Source: 'BGC survey predicts £2.7bn bet annually on UK black market', igamingbusiness.com, September 19, 2024. By GamesAndCasino