Report Highlights Surge in Unlicensed Online Gaming Transactions

A growing concern for the UK gambling industry is the amounts being wagered at unlicensed sites. Figures seen in a new study show that a total of £4.3 billion a year is being spent with them by 1.5 million players.

The study was carried out by Frontier Economics under a commission from the Betting and Gaming Council (BGC). The findings are worrying for several reasons for players at such sites and those online gambling websites that are licensed and regulated by the UK Gambling Commission (UKGC) as on British Gambler. It’s also a concern for the UK Government and action does need to be taken to reduce this figure.

It is important that a gambling site is licensed and regulated. Looking at this from the point of view of the gambler, it ensures that there is a higher level of customer protection. If any problems do arise with such sites, then a complaint can be made to the UKGC who will then investigate the matter. If they feel there are problems, then the UKGC will take action and have done so against several sites. This has included ordering companies to make regulatory settlements.

It’s a different story with gambling sites on what is known as the black market. The lack of a licence also means that they are not being regulated. They do not have anyone to answer to and therefore the level of customer protection is considerably lower.

As for the gambling companies themselves, they face a situation where revenue is being lost. People are placing wagers, whether it be on casino games or sports events but it is not heading in their direction.

The UK Government needs to be concerned too. They receive a great deal of tax revenue from the licensed gambling industry. That is not the case for those sites that are operating without a licence. It’s believed around £335 million of tax could be lost over the next five years. At a time when the new Labour government is attempting to rebuild the economy, that’s a sum they can’t afford to miss out on.

The Frontier Economics study has shown just how worrying the problem of unlicensed gambling is in the UK. It has shown how illegal companies are aggressively targeting gamblers, particularly those who are vulnerable and in danger of suffering gambling harm. They don’t just do this towards young people but those who have self-excluded themselves from the licensed operators.

It’s the targeting of younger people by the black market that is highly concerning. Information that has been gathered has revealed that over a fifth of gamblers aged between 18 and 24 access unlicensed betting sites. They receive messages offering higher bonuses, less restrictions than at licensed sites and anonymity.

Those players who are having problems with their gambling behaviour can self-exclude themselves from licensed sites. This can see players unable to play again at any site that has been licensed by the UKGC.

The study also produced evidence that VPNs are being used that allow users to access overseas gambling platforms that are unregulated. Often players do not even know they are using unlicensed sites as they successfully copy those that are

It is not  just online sites that form part of the black market. While £2.7 billion is being wagered at unlicensed online gambling sites, the other £1.6 million is being wagered in-person at illegal gambling dens.

The CEO of the BGC is Grainne Hurst and she has described the findings of the study as “shocking.” In her view, the amounts revealed are a wake-up call for both the Labour government and the UKGC. It comes at a time when there are already concerns over the number of gambling advertisements seen at football matches.

Just why are players going to the black market? The BGC CEO believes that the tightening of regulations on the licensed market is a key reason for this happening. The BGC agrees that there is the need for regulation but wants to see a balanced approach taken. Stable taxation and moderate regulations is what they believe will be the most effective measures that can be taken against the black market.

To back up their views, the BGC has shown how stricter regulations in countries such as Bulgaria and Norway have seen more gamblers playing on the black market. In Norway, this accounts for two thirds of bets placed.

Andrew Leicester is the Associate Director at Frontier Economics. He believes that the study gives out “warning signs” and the black market is “getting easier to find and access.” Mr Leicester added that care must be taken not to introduce regulations that will result in more players joining the black market.