The Betting and Gaming Council has warned of the “dangers of complacency” when it comes to black market activity, following a PwC review of unlicensed online gambling in the UK.
The data and analytics firm reported that it has “found evidence for the existence and growth of unlicensed online gambling in the UK,” which it details poses to risks player protection, sporting integrity, anti-money laundering, and tax collection.
Among the key findings is a jump in unlicensed operator usage to 4.5 per cent from 2.2 per cent compared to a similar study conducted in 2019, meaning that the number of customers using an unlicensed betting website has grown from 210,000 to 460,000.
An increase in unlicensed operator spend from 1.2 per cent to 2.3 per cent was also documented, which sees figures rise from approximately £1.4bn to £2.8bn.
However, reductions in both unlicensed operators in Google search results, from 12 per cent to five per cent, and unlicensed operator awareness, from 47 per cent to 44 per cent, were also evident.
The share of spend with unlicensed operators varies by product vertical, with results showing that the share of spend has increased across all categories except for slots during the last one to two years, with bingo and casino games seeing the largest rises.
Michael Dugher, the BGC’s chief executive, said: “This new report by the PWC is an impressive and comprehensive piece of work which demonstrates how the unsafe, unregulated black market is a growing threat to British punters.
“These illicit sites have none of the regulated sector’s consumer protections in place, such as strict ID and age verification checks, safer gambling messages and the ability to set deposit limits.”
The report goes on to examine a number of European regulatory approaches, suggesting that size of the online black market is larger in countries where the regulated betting and gaming sector is less competitive.
The report says: “This analysis suggests that the UK has a more ‘open’ online gambling market and currently has a smaller unlicensed market share than our European benchmarks.
“Whilst it is not possible to isolate the impact of individual regulatory characteristics, the above assessment suggests that jurisdictions with a higher unlicensed market share tend to exhibit one or more restrictive regulatory or licensing characteristics.
“These create more ‘frictions’ between gamblers and licensed operators or make it more difficult for operators to compete (either financially through additional costs, or by restricting certain products or advertising).”
Dugher commented: “This analysis suggests that the UK has a more ‘open’ online gambling market and currently has a smaller unlicensed market share than our European benchmarks.
“Whilst it is not possible to isolate the impact of individual regulatory characteristics, the above assessment suggests that jurisdictions with a higher unlicensed market share tend to exhibit one or more restrictive regulatory or licensing characteristics.”
Adding: “I know this evidence is inconvenient to those who seek to dismiss and play down the threat of the black market, but there is a real danger of complacency.
“The UK risks sleep walking into changes where the main beneficiary is the unlicensed black market. We all have an interest in getting future changes right, so must take heed of this latest evidence and look at what is happening elsewhere around the world.”