UK trade group the Betting and Gaming Council (BGC) is urging the government to “consider targeted measures” to protect vulnerable players in the long-awaited Gambling Act white paper.
Fresh calls from the BGC followed the release of research it funded which was undertaken by PwC, on reviewing the size of unlicensed gambling in the UK.
The BGC claims the report has uncovered the “shocking scale” of black-market gambling in Europe “following the introduction of strict new measures on regulated operators”.
“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,” the report says.
Michael Dugher, the BGC’s chief executive, said there is a “danger” the review will grow the black market “substantially”, threatening the industry’s contribution to taxes, employment and “jeopardise the £350m a year which our members currently give to horseracing in sponsorship”.
“This research is stark about the dangers of the black market. We have to learn lessons from abroad, and make the right choice at this dangerous crossroads,” Dugher said.
The report found the percentage of survey respondents who used unlicensed operators over the past year rose from 2.2 percent in 2018/19, when PwC undertook similar research, to 4.5 percent in November 2020, when the latest survey was taken.
Also during the same period, the share of online stakes with unlicensed online operators grew from 1.2 percent to 2.3 percent, corresponding with a doubling of stakes with unlicensed operators from £1.4bn to £2.8bn.
This was despite the frequency of unlicensed operators appearing in the first ten pages of Google search results decreasing from 12 percent to 5 percent.
However, the overall share of gambling website visits to all unlicensed operators fell from 2.5 percent to 2.4 percent, primarily driven by the change in Google search results, according to PwC.
Online gamblers were then asked if they would look for new operators if faced with a range of potential new restrictions.
Half of the respondents said they would if odds or payouts were decreased and more than 30 percent would if they were asked to provide additional information on affordability or source of funds, as well as if fewer games or products were available.
The research looked into “comparable” jurisdictions, including Norway, which has a state-run monopoly, saying affordability checks and advertising “resulted in a black market that now accounts for over 66 percent of all money staked”.
The Norwegian Gambling Authority (NGA) said it does not know the exact figures on the size of the market, only estimates.
“If you look at the entire gambling market (including land-based) we estimate that approximately 15 percent of Norway’s gambling is with offshore operators,” Atle Hamar, the NGA director-general, told VIXIO.
However, when it comes to online gambling, the NGA estimates 50 percent of Norway's gambling happens offshore, with that percentage falling when online equestrian sports are added to the equation.
The NGA is aware of private analysis giving other estimates, generally due to them using different parameters when estimating the size of the gambling market.
“We see year by year the market is turning towards regulated games. Norway has strict regulatory measures such as a ban against tv-marketing for offshore operators as well as a payment ban, which over the last years has proven to be quite effective,” Hamar said.
The report also claimed 38 percent of Swedish self-excluded players reported still being able to bet online with unlicensed operators, circumventing any player protection measures.
A spokesperson for the Swedish Gambling Authority said it is difficult to comment on the statistics in the report; however, it did conduct a survey last year to try to find out why licensed operators or unlicensed operators are chosen.
The survey found 7 percent of players gambled on a site without a Swedish licence and 12 percent did not know if they had done so.
The most important reason (25 percent) to play on sites without a Swedish gaming licence is odds and winning opportunities, according to the survey, with 21 percent of players using unlicensed sites due to bonus offers and 20 percent using it to dodge self-exclusion bans or avoiding deposit limits.
However, Gustaf Hoffstedt, secretary-general of the Swedish Trade Association for Online Gambling (BOS), told VIXIO that “what the report points out is serious, and the situation is probably even worse”.
Hoffstedt said gambling regulation is a balancing act that must protect consumers and ensure they see licensed offerings as the most attractive.
“Too little care has been taken when it comes to encouraging consumers to gamble within the licensing system, and the consumers who would be most in need of the licensing system's care and protection measures have left in favour of unlicensed gaming, where consumer protection shines with its absence,” Hoffstedt said.