Black market could lure customers in wake of gambling regulations report claims

Overregulation of online gambling risks pushing punters in the United Kingdom towards the unregulated 'black' market, according to a new report produced by accountancy firm PwC.

The report, commissioned by Ladbrokes Coral's parent company GVC Holdings and William Hill, said the estimated size of the active online gambling black market in the UK was worth £1.4 billion or 1.2 per cent of turnover.

However, it added that regulatory changes such as increased due diligence checks and credit card restrictions raised the risk of gambling with unlicensed operators growing.

"Further regulation may lead to frictions in the customer experience [...] and drive gambling further into the black market," a summary of the report, which has not been published, said.

The report was based on data collected in 2018 from 3,000 gamblers, PwC partner Andy MacGilp said.

He added: "Many of those frictions in the gambling industry are very good ones and are there for good reason to protect consumers and protect the industry, so we are not saying they should be removed, but I think we are saying the relationship between their existence and potentially unintended consequences is something that needs to be carefully considered."

Asked if restrictions on punters' gambling could be another friction point, MacGilp said: "Anything which causes a source of friction for a consumer in terms of their journey is a potential catalyst to someone seeking a new operator and a potentially unlicensed operator.

"If they can't get the bets on they want, or they have to prove source of funds or they just can't play the products they want, I think those are all reasonable hypotheses as to why someone would go to a different operator."

Around 200,000 gamblers in the UK, 2.2 per cent of the total, have used an unlicensed operator in the last year, the report claimed.

The report also claimed its analysis showed that in European markets where there were more points of friction for customers or where it was harder for licensed operators to compete, there was a higher proportion of gambling in the black market.

Wes Himes, the interim chief executive of the new gambling industry association the Betting and Gaming Council, said the sector accepted there would be changes in regulation but that there also needed to be balance.

"Operators are committed to raising standards in education, prevention and treatment of problem gambling – and to do that we accept there will be regulatory changes," he said.

"Lessons from elsewhere in Europe show it is a delicate balance of creating friction points with players and the risks of players moving to unprotected environments."

However, a spokesperson for the Gambling Commission said the sector needed to concentrate on putting its own house in order.

They said: "The gambling industry needs to focus its energy on raising standards to make gambling fairer and safer for British consumers. We will continue to work with many other organisations to take swift action to tackle unlicensed illegal operations."

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