Concerning global figures continue to lay bare the significant threat of the black market.
A Yield Sec report commissioned by the European Casino Association estimates that the European Union’s black market dwarfs the regulated sector by more than double, and is currently worth €80.6bn in gross gaming revenue annually.
Meanwhile, a similar report from H2 Gambling Capital for Responsible Wagering Australia (RWA) estimates Australia’s gambling market is leaking AU$3.9bn (£1.9bn) a year to illegal sites, with this figure expected to rise to AU$5bn (£2.5bn) by 2029.
Vulnerable consumers
Yield Sec’s report highlights the “abuse of regulation and consumer protections” by illegal operators.
It also details how social media advertising is used to reach vulnerable customers and how black market operations impersonate licensed casinos using their logos and imagery.
“Unlike licensed operators, who use data to identify and support at-risk customers, illegal sites use it to target vulnerable Australians and minors with high-risk offers and exaggerated bonuses,” concurred RWA’s CEO, Kai Cantwell.
“Australia’s world-leading consumer protections are only effective if people stay within the system, and right now, it’s too easy to bypass them offshore with a few clicks.”
The report from Australia notes that 50% of Australians who gambled offshore have done so after registering with the country’s self-exclusion register, BetStop.
Vital tax revenue
Diverting funds away from the regulated market comes at a major cost to both operators and the economies they exist in.
Using a blanket tax rate of 25%, Yield Sec suggests that the EU’s 27 member states are losing out on over €20bn in tax revenue each year.
This figure has widely been touted as the tipping point for taxation, whereby the scales truly begin to weigh in favour of the black market and against the regulated industry.
“Illegal online gambling is not a marginal issue; it is an economic and societal threat. Every euro lost to criminal operators is a euro stolen from European citizens, from legitimate and licensed businesses, and from our communities,” said Erwin van Lambaart, Chair of the ECA.
Similarly, in Australia, the black market is expected to cost the government almost $2bn in lost revenue over the next five years, and almost $800m in lost product fees to sport and racing.
Clever market reform
In Australia, better odds (48%) and bonuses (44%) were the most commonly cited reasons for players to stray to the offshore market. However, the survey also noted that live in-play betting, an offering prohibited by Australia’s gaming rules, was an influential factor.
Factors such as better odds and bonuses were the most commonly listed reasons for engaging with the black market, and Cantwell emphasised the need for Australia’s regulated market to remain competitive.
“If people can’t find the products or prices they want here, they don’t stop gambling, they just go offshore,” he added.
H2 Capital’s report recommends the formation of a National Illegal Gambling Blacklist Platform (NIGBP) and the integration of the National Self-Exclusion Register with payment monitoring systems to block transactions for BetStop-registered individuals to operators listed on the NIGBP.
“A strong, consistent national framework will protect Australians, preserve funding for sport and racing, and ensure initiatives like BetStop aren’t undermined by unregulated offshore sites,” concluded Cantwell.
