Last month, we reported on a study by Frontier Economics, commissioned by the Betting and Gaming Council, that revealed a whopping 1.5 million Britons were wagering up to £4.3 billion ($5.6 billion) every year with black market operators.
The report, which was the pioneering high-profile investigation into the UK black market since the government’s much-anticipated White Paper on gambling reform, uncovered the increasing threat posed by operators that are not regulated.
Now, the UK Gambling Commission (UKGC) is working on its own comprehensive study of the black market, trying to improve the efficiency of its monitoring efforts aimed at illegal online gambling operations. The initial findings are expected to be released in late spring 2025.
Tracking and Estimating the Scale of the UK’s Black Market
The study aims to provide a clearer understanding of how and why consumers access unlicensed gambling websites and help the commission that licenses, regulates, advises, and provides guidance to individuals and businesses that offer gambling in Great Britain improve its ability to track and estimate the scale of the black market.
“With a better understanding of why and how consumers access unlicensed gambling websites, we can identify ways in which we can use data to identify unlicensed websites and make estimates of their usage by GB consumers,” the UKGC said in a statement outlining the study’s methodology and goals.
To estimate the gross gambling yield (GGY) of the unlicensed market, the UKGC is following a similar approach to other European regulators, combining web traffic data with gambling behavior.
This involves using data from unlicensed sites and calculating the average player spend.
The player spending data was collected from 139,152 gambling accounts from major operators between July 2018 and June 2019.
The average GGY for online slots is estimated at £0.32 ($0.2) per minute, although this methodology may not fully account for high-spending customers in other sectors like sports betting.
To track web traffic, the UKGC will use tools like Google Trends and Similarweb to analyze search terms, flag affiliated sites, and monitor traffic on unlicensed websites that are accessible to UK consumers.
Web traffic and visit duration will be analyzed to give insights into how often these sites are used.
Challenges and Future Versions
The UKGC’s study acknowledges challenges faced by other regulators, such as the Netherlands’ KSA, which announced the introduction of stricter action to fight off illegal gambling machines at the end of May, and Sweden’s Spelinspektionen, which recently emphasized that black market operators pose a danger to Swedish consumers.
Both regulators noted that player spending on black market sites may be higher than on licensed platforms.
The UKGC also observed a trend where spending behavior differs between licensed and unlicensed sites.
Besides highlighting this trend in its new study methodology, the commission also acknowledged that its approach does not account for the time players spend on unlicensed websites when no money is being wagered.
Future versions of the study will consider additional factors, such as the role of social media, encrypted messaging apps like WhatsApp and Telegram, and streaming platforms such as Twitch and Kick, which can drive traffic to illegal gambling websites.
The UKGC is inviting licensed operators to share relevant data and provide feedback to improve its methodology and methods of detection.
