The UK Shadow Cabinet is joining the Betting and Gaming Council (BGC) in putting pressure on the government to ensure it doesn’t neglect the threat of the black market, as it implements historic tax hikes on the regulated sector.
Shadow Secretary of State for Culture, Media and Sport, Nigel Huddleston, urged the government to take action on the black market and ensure it doesn’t leave the door open for it to surge.
Accelerating wider pressure on the government around the black market and the consequences of the tax increases, the Droitwich and Evesham MP emphasised that ‘the government must recognise that tax policy is not separate from consumer safety’.
As warnings echo around Westminster, Huddleston highlighted the importance of enforcement in thwarting the black market’s fresh ability to flourish.
There needs to be ‘a relentless focus on disruption, illegal sites, illegal advertising and illegal payments’, if there is to be a sufficient impact on the growth of the illegal market, according to Huddleston.
Huddleston also underpinned the important need for collaboration as he stated that they ‘are ready to work with the industry to ensure that regulations have their intended consequences’.
Pressure isn’t isolated to opposition benches, however, and is also coming internally from the Labour Party, after Stoke on Trent MP, Gareth Snell, tabled an amendment to the tax rises to ensure that it is fully aware of the consequences of tax hikes on the black market.
Snell urged lawmakers to ‘produce an official study on whether it will push gamblers into illegal markets’. However, lawmakers dismissed these calls, stating that current UKGC studies into the black market are sufficient.
As tax hikes take hold, the government is seemingly set to take action on the black market, beginning a consultation on banning unlicensed sponsorships on UK sports teams, including in the Premier League.
Whilst it is unlikely to go nearly far enough to close the door opened by a tougher taxation regime on the regulated market, it does underpin the government’s focus on clamping down on the black market’s exposure, marking a major shift in the sponsorship landscape for top-flight football.
It outlines a broader challenge for policymakers seeking to ensure that tougher taxation and advertising regimes don’t increase the black market’s opportunities.
The government has been criticised for not going far enough. Recently, during the BGC AGM, Grainne Hurst, CEO of the BGC, warned that the £26m allocated to fighting the black market could be inefficient if tax changes divert more consumers to the sector.
She labelled it ‘incredulous’ that the government’s own figures estimate that tax changes will drive £500m more into the black market.
Hurst warned: “That seems to be a price that’s worth paying. What world are we living in where that is a sensible and coherent position to take?
“[The government] have given the gambling commission £26m to tackle the black market, but actually that’s missing the point. We need to stop sending people into the black market for the gambling commission to take action then on. We need to make sure that the regulated sector is attractive, healthy and sustainable.”
VNLOK warns ad ban would ‘undermine player protection’
It’s a debate that rages on in the Netherlands, where the country’s gambling trade body has pleaded with lawmakers to make a ‘fair distinction’ between the regulated sector and the black market as demands for a total ad blackout ratchet up.
In response to a bill lodged by Mirjam Bikker of the Christian Union (CU) and Sarah Dobbe of the Socialist Party (SP), which calls for steeper fines on non-compliant operators and near-total restriction on advertising, Vergunde Nederlandse Online Kansspelaanbieders (VNLOK) said the concerns raised are ‘misleading’ and do not ‘do justice to reality’.
Björn Fuchs, Chairman of VNLOK, said: “We share the desire to protect vulnerable groups more effectively. We are happy to discuss this with the ChristenUnie and SP to explore where further optimisation of player protection is possible.
“In doing so, however, a fair distinction must be made between the activities and consequences of illegal providers on the one hand, and those of legal providers on the other.”
The action by Bikker and Dobbe follows the Dutch gambling regulator handing a record €24m fine against Novatech for offering illegal gambling services. At the time, the KSA said it would have imposed a larger fine; however, Dutch rules restrict financial penalties to 10% of a company’s annual turnover.
Under the newly proposed bill, the KSA would be able to impose fines of up to 100% of a company’s annual revenue. The proposals also call for faster shutdowns of illegal gambling websites.
Dobbe said: “These companies generate hundreds of millions in revenue. That’s going to really hurt.”
The two politicians both expressed concerns over the rate of gambling addiction in the Netherlands, especially among young people.
However, VNLOK emphasised that the regulated market is already required to fulfil a duty of care to players and adhere to strict rules surrounding advertising and operating procedures.
The group called on the government to do more to target the black market, noting that more than half of every euro gambled online across Europe goes to illegal sites.
The group stated: “Simply being able to shut down illegal gambling sites is not enough. The online infrastructure we rely on – search engines, social media, advertisements, payment transactions – is being abused by unlicensed parties. These parties pay no heed to Dutch laws and regulations. They do target minors and vulnerable players and make a lot of money from it. This must be dealt with firmly.”
The upcoming SBC Summit in Malta is set to analyse the full impact of tax rises, market turbulence, and the squeezing of operator margins on the black market’s ability to grow.
On the opening day, the Risk Regulation and Resilience track brings together key European operators to assess the best approach to adapting to tax rises.
To find out more about the event, click here.
