The Betting and Gaming Council (BGC) has issued a warning about a surge in illegal websites operating in the UK, which use cryptocurrencies to avoid detection and exploit vulnerable gamblers. The council highlights a significant threat posed by these unregulated entities, which are increasingly appealing to self-excluded individuals.
A potential increase in gambling taxes could exacerbate this issue. According to a survey, if such tax hikes were implemented, a substantial 28% of regular gamblers would be tempted to shift towards illegal operators. BGC CEO Grainne Hurst emphasized the perils of misjudging tax and regulatory measures: if the balance is wrong, it could inadvertently enhance the black market’s allure, which pays no taxes, makes no contributions to British sports, and lacks safer gambling measures.
Even without these potential tax increases, challenges persist. The BGC survey reveals that 14% of respondents have already engaged with illegal operators, and 29% struggle to differentiate between regulated and unregulated providers. This confusion among consumers underscores the complexity of the gambling landscape and the need for clearer regulatory frameworks.
In a concerning study by Yield Sec, it was found that around GBP 583 million is being wagered illegally within the United Kingdom. The proliferation of illegal gambling is partly fueled by a significant number of self-excluded gamblers, as indicated by both Yield Sec and the BGC. It seems that these gamblers are being systematically targeted by affiliate companies promoting “websites not on GAMSTOP.” GAMSTOP, the official self-exclusion program in the UK, appears to be a focal point for these illicit operators.
The problem gains further depth when considering the insights from Yield Sec’s research. Founder Ismail Vali argues that the growth in illegal gambling revenue is primarily driven by individuals registered on self-exclusion platforms. In 2020, the illegal market accounted for 0.43% of the total industry in the UK, but it has now surged to approximately 9%, driven by aggressive targeting strategies like the “not on GAMSTOP” keywords designed to exploit vulnerable players.
Offshore and unlicensed operators have found a lucrative market in those barred from regular gambling sites. Vali highlights that there is no legitimate reason for regular consumers to opt for illegal gambling. Hence, these operations specifically target those with prohibitive reasons, such as being underage or enrolled in self-exclusion programs. He points out the calculated nature of illegal operators who avoid legal markets due to the high costs of compliance and taxation.
This perspective is echoed by Derek Webb, founder of the Campaign for Fairer Gambling. He criticizes the government’s intense focus on ensuring compliance within the regulated market, while illegal operators thrive by targeting those who have deliberately self-excluded. These operators offer venues like “casinos not on GAMSTOP,” indicating a deliberate exploitation of a regulatory loophole.
The situation poses a dilemma for regulators and the government. While there’s a push to tighten rules and ensure compliance in the licensed market, these measures may not significantly deter those already inclined towards illegal options. Some argue that increasing awareness and education around safe gambling practices might be a more effective strategy. By equipping consumers with better knowledge, the gap between regulated and unregulated operators might become more apparent, reducing the appeal of illicit gambling sites.
However, others contend that education alone is insufficient. They argue for a more robust legal framework that not only penalizes illegal operators but also addresses the root causes that drive gamblers towards such platforms. This could include more effective support for self-excluded gamblers, addressing issues like addiction and financial distress that often lead people to seek out unregulated gambling options.
In contrast, proponents of stricter regulations assert that tightening existing laws and increasing penalties for illegal operators are necessary steps. They believe that without punitive measures, the illegal market will continue to thrive, exploiting vulnerable gamblers who are often unaware of the risks involved.
This complex issue is further complicated by the evolving nature of technology and gambling habits. As digital platforms become more sophisticated, so do the methods employed by illegal operators to attract users. This necessitates an equally agile response from regulators, who must adapt their strategies to counter emerging threats effectively.
Ultimately, the challenge lies in balancing regulation and taxation to protect consumers while not inadvertently driving them towards the very markets that pose the greatest threat. As the debate continues, stakeholders from all sides agree on one point: protecting vulnerable gamblers should remain the priority in any regulatory strategy, ensuring that the lure of illegal gambling does not outweigh the safety and fairness of the legal market.
