The latest data from YieldSec should act as a stark warning to the UK market as the issue of the black market continues to intensify in the EU.
As the UK government hurtles towards tax hikes, even amidst warnings of the threat of the black market, a worrying European outlook could serve to put the brakes on the motives of the Labour Party.
According to YieldSec, unlicensed platforms accounted for 71% of Europe’s online betting and gaming revenue came from unlicensed operators.
The data, which was conducted for the European Casino Association, revealed that €80.65 billion out of a total market revenue of €114.3 billion, came from unlicensed operators.
On the other hand, recent research from Frontier Economics underpinned the stark difference within the UK, revealing the black market as having around 2.1% of online stakes in the UK.
What this underpins is that the ceiling is somewhat high for the black market in the UK, with unfavourable regulations potentially enabling the unlicensed market to surge.
According to the report, around 6,200 illegal operators are actively targeting the EU market as regulatory frameworks for licensed operators tighten across a myriad of countries.
What is perhaps even more concerning is the alarming rate at which the problem is rising, with the unregulated sector outgrowing the regulated market.
YieldSec detailed that illegal revenue elevated by 53% from 2023, meanwhile, in comparison, the legal gambling market grew by about 30% to €33.64 billion during the same time period.
In the UK, the warnings of the black market are seemingly failing to have a consequential impact on the debate around gambling industry framework.
Stewart Kenny, co-founder of Paddy Power, who since his resignation from the operator in 2016 has been heavily critical of the industry, was even scathing about the industry’s use of the black market threat.
He stated: “I’m embarrassed to admit this…we knew it was way exaggerated but it is the perfect way of saying ‘the government will lose money’ – but in fact it won’t.”
Kenny’s comments only serve to fuel further speculation around tax hikes within the UK, as industry warnings over the black market threat become more prevalent.
On the other hand, Flutter Entertainment added to the issue with a stark warning against the impact of tax hikes.
Sebastian Butterworth, Director of Racing Strategy at Flutter UKI, emphasised that the touted rises will have a significant impact on future investments in racing.
He stated: “Any increase in gambling tax will have a profound effect on funding for racing – be that a rise in betting duty or a tax raid on people who play games like online bingo and poker.
“We are already having to reconsider certain investments in UK racing, and we urge the Government to reconsider.”
This followed up concerns from evoke and Entain, who both aligned with urging the government not to increase tax rates.
Updating investors during the company’s H2 earnings call, Chief Financial Officer Sean Wilkins urged the Government to be vigilant over what happened in the Netherlands, where significant tax rises led to the surging of the black market.
Wilkins stated: “We want to see a balanced approach from the government to get more cash, but also to ensure the protection of an industry we should be proud of.
“Increased tax beyond a certain point we know leads to black market growth, which leads to less tax take and zero player protection and is completely against the objectives of the Government. This is not speculation, this is evidenced in the Netherlands.”
Rob Wood, the Chief Financial Officer of Entain, also underpinned the organic growth of the industry and subsequently its tax offering.
“Our sector contributes around £4bn every year to the Treasury in the UK, employing over 100,000 people. When you look at Entain, we pay over half a billion pounds to the UK Treasury every single year. That makes us one of the top 20 taxpayers in the country. What’s great all around is that the amount of money is growing, so just through industry growth and a thriving sector, tax take is growing.”
He warned against the UK Government moving to ‘a draconian regime’ like in the Netherlands, which is now facing a major issue in tackling black market engagement.
“The obvious way to mitigate, which we would do whichever tax goes up because we’re one business in the UK, is through consumers. So the odds get worse, the promotions get worse, generosity gets worse, and the consequence of that is black market operators, who don’t pay any tax or have any player protection, pick up customers.
“From the outside, it’s very clear that the losers are the Treasury, the losers are the operators, also sport, because we also have to mitigate through marketing revenues – things like sponsorships go down – employment suffers, so really the only winners are the black market operators. The reassuring thing is we do think that the Treasury knows that and understands that’s true.”
This was evidenced from recent results by the KSA, which detailed that in spite of tax rises, overall tax intake in the first half of 2025 had fallen by 25%.
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