BGC report claims £4.3bn staked on UK black market each year

A new report commissioned by the Betting and Gaming Council (BGC) has revealed as many as 1.5 million Britons are staking £4.3bn on the black market each year.

Published by consultancy firm Frontier Economics, the study found that UK customers are being aggressively targeted by unlicensed operators, potentially costing the Treasury £335m over the course of the next five-year parliament if the trend continues.

That figure is the equivalent of 1,500 teacher salaries, 1,700 nurses’ salaries or as many as 1.2 million extra GP consultations, as per the study.

Of the £4.3bn being staked, £2.7bn is estimated to come in the form of illegal online gambling, including sports betting, online casino, horseracing and poker.

The £2.7bn figure sits at around 2% of the legal online market, with 0.8% of respondents solely using black market sites and 5.4% using a combination of legal and illegal ones. The Frontier Economics study surveyed 2,206 panelists online.

The remaining £1.6bn is reportedly being staked at land-based illegal gambling dens.

In terms of the size of the black market, the study suggested between £39.6m and £67m in tax monies are being left outside of the ecosystem, suggesting a betting and gaming tax gap of between 1.5% and 2.7%.

Such is the level of black market targeting that one in five adults aged between 18 and 24 who bet already participate in black market activity online through secure online messaging apps.

The illegal operators that are based abroad have even taken to targeting customers who have already self-excluded via GAMSTOP.

The report cited black market customers’ reasons for using illegal operators, with the main benefit being “better bonuses and free bets”, while ease of use and anonymity were also top-ranking factors.

The paper also reported that 15% of those surveyed had heard of at least one online black market operator, compared to 98% being able to name a licensed firm.

Extrapolating that figure, the report suggests that around 2.8 million people in the UK would have heard of at least one illegal firm.

That awareness is driven primarily by social media and sponsorship, according to those surveyed.

Significantly, high rollers are far more likely to use black market sites as opposed to more recreational punters.

The study noted of those who stake more than £1,000 a month, 14% used at least one illegal site compared to those who stake under £200 a month (3%).

Many of the illegal sites encouraged crypto gambling and gambling with credit cards, while presenting as regulated sites to such a degree that more than half of the players (54%) were unaware they were wagering with unregulated operators.

Curbing black market activity and thwarting the unlicensed operators inspiring it has proved difficult, given how easy it is for them to rebrand and evade detection.

BGC CEO Grainne Hurst reflected on the report’s findings and issued a scathing assessment of black market operators.

She said: “This shocking report exposes the unnerving true scale of the growing, unsafe, unregulated gambling black market.

“From online gaming, to betting on sports like horseracing, millions of customers are being driven into the arms of pernicious black market operators.

“These people don’t care about player safety, don’t want to pay their fair share to support sport and don’t pay a penny in tax.

“By failing to adhere to the stringent standards set by the Gambling Commission, unregulated operators in the unsafe black market can make bigger offers, grant customers total anonymity, and promise the freedom to gamble without any controls or safety measures, unlike BGC members.

“Worst of all, these sites are making a mockery of the rules set up to protect the most vulnerable by aggressively advertising their services to those who have self-excluded.”

Hurst continued by sending a stark warning to the government, who she argues risk “sleepwalking” into an issue that cannot be resolved by simply entrusting the Gambling Commission with more responsibility.

Hurst added: “The best defence against this growing illegal, gambling black market is getting the balance of regulations right.”

Andrew Leicester, an author of the report and associate director at Frontier Economics, expressed a similar sentiment as he claimed: “The landscape is evolving quickly in ways that suggest black market gambling is getting easier to find and access.

“This report provides timely new evidence on the scale of the black market. Efforts to make gambling safer are important, but must avoid the risk of simply pushing more players and spend into unregulated providers who do not need to comply with regulations around safer play.”

That theory has been supported by other European countries that have deployed strict measures, only to see the rate of unregulated gambling increase as a result.

New restrictions in Norway inspired a black market that now accounts for over 66% of all money staked, while in Bulgaria that figure sits at 47% and in Portugal it is 31%.

The report was conducted with the help of surveys taken from two sources: a nationally representative sample sourced from a panel provider, as well as customers of gambling industry operators, before being combined to produce one final data sample.