Regulus Partners says at least 20% of British racing turnover has shifted to black market

Gambling industry analyst firm Regulus Partners estimates that at least 20% of British horseracing’s turnover – some £2bn – is already in the hands of the black market.

The shift represents a 7%, or £80m, hit to the sport’s annual revenue, Regulus Partners said in the latest edition of its weekly newsletter published on Sunday, 19 February.

With bookmakers imposing intrusive affordability checks on certain customers, coupled with account restrictions, some bettors are turning to unlicensed options – or packing in betting on horseracing altogether.

Regulus Partners said its view was supported by a survey from subscription horseracing channel Racing TV which found 15% of 3,539 respondents said they bet, or know someone who bets, with an unregulated online bookmaker.

The results of the survey, published on 13 February, also showed that 22% of the 3,575 who replied said to that question they have been asked to supply personal information to an operator.

Half (404 respondents) of those asked to supply this information, refused to do so.

In relation to the question about the black market, Regulus Partners said that while 15% of 3,539 might not sound like a lot, this figure represents 15% of the sport’s most engaged customers.

The analyst firm said the danger is more and more bettors might “switch to the simple black market betting alternatives increasingly via messaging apps”.

These services can “provide tight prices based on offshore exchanges and/or cost models that do not factor in levy and media costs”.

Regulus Partners added: “Essentially, easy-to-use black-market operators are potentially doing to the finely balanced and ex-growth racing-betting ecosystem of 2022 what Betfair did to the rich but complacent ecosystem of 2002, but without any incentive to work with GB racing to fix the damage of collapsing margins and tax/levy avoidance through offshoring.

“Crucially, much of this black-market growth is relatively recent and has been fuelled primarily by high spending, but unsuccessful punters not wanting to answer the source of funds questions that most licensed betting operators now require due to the Gambling Commission’s interventions, adding to the old problem that successful punters have been factored or banned by bookmakers for years (around half the staking amount but de minimis revenue, in our view).”

Last week, British Horseracing Authority CEO Julie Harrington said affordability checks pose a “serious threat” to the future of horseracing.

Bookmakers pay 10% of their gross profits on British racing to the levy, yet the fear among industry stakeholders is levy income could fall if punters shun legal operators.

The levy yield for the year 2021/2022 was £97.6m, up from the £82m the previous year when Covid-19 played havoc with the sport’s calendar, but down on the £98m achieved in 2019/2022.