The illegal online gambling market is growing at pace, taking advantage of regulatory gaps, preying on vulnerable individuals and diverting customer spend from licensed operators. Despite the growing concern throughout the gambling industry, there is still no clear consensus on how to define the black market, or how best to address it.
The Ambiguous Market
According to panellists at the EGF, one in five 18-24 year olds who gamble are doing so on an illegal gambling site. Although striking, this figure is only one concern within a broader and rapidly developing pattern of unregulated gambling activity that is beginning to reshape the gambling regulatory landscape. The ‘black market’, a term that in itself is contested, refers to gambling operators targeting customers in countries where they have no legal right to operate, offering little to no consumer protection, no data security and no accountability. Where gambling was previously contained within jurisdictional boundaries, the rapid expansion of the internet has removed a number of the limits on where and how it can take place, allowing a shadow industry to emerge. These operators are typically based offshore, concealed behind private shell companies across multiple jurisdictions, using methods like cryptocurrency for payments and VPNs to hide their true locations. By the time regulators identify a site and move to shut it down, it has already rebranded, rebuilt its platform and resumed operations under a new name.
Regulated vs Unregulated
There can be a significant disparity between a regulated gambling site and a site operated by an illegal operator. On a regulated site, customers benefit from a number of protections including data security, affordability checks, intervention mechanisms when spending triggers concern and self-exclusion tools. Operators are bound by law and answerable to the regulator, e.g. The UK Gambling Commission. On an illegal site, however, this tends not to exist. Personal information, such as home addresses, banking details and contact information, is not covered by any protection, meaning it could potentially be accessed by anyone and with no assurance regarding where or how it is stored. Crucially, there are also no limits on spending. The operators’ objective is to extract as much money as possible from the consumer. Customers do not encounter any kind of intervention and the operators are not constrained by any regulations. The framework governing licensed gambling exists to prevent these very forms of exploitation that arise when those safeguards are removed.
The difficulty of differentiating the illegal sites from the legal ones is a prevailing issue at the core of the black market phenomenon. The digital world is now heavily gamified in which points, bonuses, levels and rewards are embedded in everything. As almost every online service is designed to mimic the look and feel of a game, consumers face real challenges in deciphering a licensed gambling operator from an illegal site. In reality, a lot of people will have no idea that they are gambling on an illegal site. Modern gambling has evolved to exploit the biases in human decision making whereby simplicity is desired. Illegal operators have capitalised on this by creating systems of minimal effort with no age verification, no background checks and no self‑exclusion mechanisms. The easiest way to determine the difference between an illegal vs legal site is the fact that every regulated gambling site is registered with its relevant authority and its licence number can be verified against the regulator’s public register. In practice, however, very few users take this step, leaving considerable challenge and risk in this area.
One of the most concerning features of the black market is its deliberate targeting of individuals who have recognised their vulnerability and self-excluded. Self‑exclusion schemes such as GamStop allow people to block access to all licensed operators. Yet some illegal providers actively advertise themselves as “Non‑GamStop” sites, intentionally positioning themselves to attract those actively trying to stop their gambling. Accordingly, the black market is intentionally exploiting the very individuals the regulatory system is designed to protect.
Black, white or Grey?
There is also a debate concerning the term ‘black market’, which is not universally accepted. Some members of the industry prefer to include the terms ‘ambiguous market’ or ‘grey market’ as well, considering the fact that what will constitute illegal gambling will vary significantly from jurisdiction to jurisdiction. In some US states, for example, technically all gambling that takes place is illegal.
What is clear is that the challenge is unifying operators and regulators. Twenty years ago, grey markets dominated and white markets were the exception. Today, the dynamic is shifting again, with the licensed, compliant sector increasingly finding itself on the back foot. Some suppliers are already treading the line between the licensed and unlicensed industry. In the US, the political landscape makes it unlikely that major tech firms will be pressured into removing illegal gambling search terms or content. Turning to the UK, the conversation has shifted from elimination to mitigation. The black market cannot be entirely eradicated, but the regulated market could be made more attractive. If licensed gambling genuinely offers a better experience than its illegal counterpart, the appeal of the alternative begins to fade. This, taken in conjunction with better information being made available to players on how to identify an illegal site, represents the most practical solution.
Ultimately, there is no silver bullet, but acknowledgement is the starting point. Recognising that the black market is not a minor concern but in fact a threat to the gambling industry as a whole. From there, the solution will lie in collaboration between the gambling operators and the regulators, providing as much information to consumers as possible and working to ensure that the regulated market is not just the legal option, but the more attractive one.
Sophia Anstey