The UK gambling industry is facing an unprecedented expansion of the black market. According to David Matthews, CEO of Onyx Gaming, overly strict regulations inadvertently push players towards illegal operators, thereby undermining efforts for responsible gambling. Over the past five years, the total revenue of the UK black market has surged by more than 500%, indicating an increasingly severe problem.
The UK has a long history of gambling regulation. The Betting and Gaming Act, introduced 65 years ago, paved the way for the legalization of casinos, commercial bingo halls, and online gambling. The Gambling Act of 2005 further initiated a new era of regulation and led to the establishment of the Gambling Commission two years later.
The Gambling Act Review white paper released in 2022 made numerous recommendations, including strengthening the Gambling Commission's power to combat illegal gambling. However, even in mature regulated markets, the black market continues to thrive.
Data shows that approximately £2.7 billion is wagered annually through the black market in the UK, accounting for 2.1% of the total betting volume of licensed operators. The appeal of illegal operators lies in simplified processes and lenient scrutiny, while regulated platforms, due to KYC, AML, and affordability checks, lead to cumbersome user experiences, prompting some players to opt for the more convenient illegal options.
Matthews emphasizes that the risks of participating in illegal gambling are clear: funds may be confiscated, unrecoverable, and illegal platforms do not contribute to the community through taxes or charity. Increased tax burdens may also drive more players towards the black market.
Licensed operators primarily rely on AML, KYC, and affordability checks, but black market operators can freely circumvent these rules, thus gaining a commercial advantage. Onyx Gaming competes with the black market by providing high-quality, valuable services, but Matthews believes that the fundamental solution lies in reevaluating regulatory strategies to ensure measures protect players without overly disrupting the user experience.
Globally, the scale of the black market is also immense: unlicensed operators in the US attract about $500 billion in bets annually, and the total value of the European black market exceeds 20 billion euros. Matthews calls on regulatory bodies to listen to operators and players, simplify regulations, encourage black market operators to legalize, thus operating in a safer environment where they can pay taxes and protect player interests.
