The Regulus report acknowledges the online gambling black market is growing in multiple markets and is increasingly posing a real threat to the regulated sector and its consumers.
“Black markets in online gambling are created when consumers cannot access the products they want at prices and values that are not distorted within their own domestically regulated market,” the report warns.
“When these frictions are introduced into a domestically regulated market there will always be at least some level of demand for black market products, even when the frictions are well-meaning and have net positive outcomes.”
Regulus is calling for regulators to introduce frictions to disrupt how the illegal market operates, to counterbalance tightening regulations that are increasingly pushing players into the black market.
Across Europe, various measures are being put in place to protect consumers from gambling irresponsibly and adopting risky behaviours. Policies like the UK’s new financial risk assessment and pending cap on slots stakes are preventing players from gambling the way they are used to.
Gambling tax increases, like the pending policy change in the Netherlands, are also likely to push players into the black market as costs are passed on to the consumer.
How to tackle the black market
The report suggests blocking unlicensed sites, as well as payments made to their IP addresses, could be the most successful measures for tackling the black market.
It also calls for targeted social media ads to be prevented and for law enforcement to blacklist black market brands and operators, as various states in the US have done to the Curacao-licensed betting site Bovada.
“Preventing black market operators from targeting consumers through mainstream and social media provides a competitive advantage to licensed sites, removes a forum for engaged gamblers to seek ‘workarounds’, and significantly reduces the risk of less engaged gamblers playing on black market sites by accident,” Regulus noted.
However, the report warns that a “one-size-fits-all approach” will not be effective across multiple jurisdictions which present their own unique challenges.
Is the UK Gambling Commission doing enough to mitigate black market growth?
Breaking down various key online gambling regions and their black-market threats, the study suggests that not enough is being done to bring down illegal operators.
Looking at the UK, Regulus calls out the UK Gambling Commission for not initiating any legal action against the 191 illegal operators it flagged and wrote cease and desist letters to in Q2.
“The Gambling Commission was therefore busy identifying and disrupting the symptoms of black-market activity but did little to impact the causes.
“The fact that over 100 black market websites are still being found per quarter despite Britain being domestically regulated since 2014, with 75 identified affiliates and advertisers helping them to promote their content in Britain, demonstrates the extent to which black market operators are resilient and regenerative to disruption that occurs only to the digital face of their distribution model,” the study warned.
Germany is flagged as a market where “significant consumer friction is built into the regulatory model” resulting in a lower-than-expected rate of channelisation for the market.
Germany’s gambling regulator Gemeinsamen Glücksspielbehörde der Länder (GGL) said illegal gambling revenue accounted for up to 4% of the overall German market in its 2023 annual report.
But stakeholders and trade body Deutscher Online Casinoverband (DOCV) have argued that figure is misleading as it considers the retail market as well as online. DOCV believes 20% is a more accurate estimate of how big the illegal market is relative to overall online GGR.
Entain’s response
Commenting on the findings, Entain chairman Barry Gibson promised to take a hardline stance on the unlicensed market.
He said: “Taking on the black market operators should be the number one priority for policymakers around the world.
“We’ll protect players, tackle crime and raise money to spend on nurses, schools, and roads. It would ensure that customers get greater protection from playing with fully regulated and legitimate operators,” he concluded.
Original article: https://igamingbusiness.com/legal-compliance/legal/black-market-regulus/
