Recently, regulated gambling markets have prioritized channelization. This is due to the increase of black market casinos. Channelization is the process of bringing existing bettors from the black market into a safer environment.
Logic would dictate that the better the regulations, the better the channelization. Data extracted from multiple entities shows otherwise. Europe and US are experiencing a rise in black market gambling regardless of the efforts put into regulations.
Recent momentum gains in the UK is toward protections that prevent people from gambling more money than they should. And it’s hard to argue against the importance of such a shift. But as with any complex, finely-balanced ecosystem, there are knock-on effects.
“Beware the law of unintended consequences,” GVC CEO Kenny Alexander. Licensed operators will become less attractive to bettors due to the more imposing regulations. This in turn would fuel the size of the black market in the UK to increase.
Black market gambling insights
In a recent PWC study which was backed by both William Hill and GVC, it was found that the UK black market is already worth north of £1.5 billion in annual stakes alone.
This study uncovered that this market was primed for further growth due to an increase in customer friction in areas such as KYC and verification procedures. High stakes bettors, regardless of the history of winnings that they possess, are finding it way harder to play.
Protecting the losing customer
Regulated and registered entities have shut down more than 500,000 high-stakes accounts in the past three years alone as to protect these players from themselves. Tangentially, countless others were guided to self-exclusion programs.
Hopefully, the losing players have quit gambling by now, realistically they have not. There is a very considerable chance that players who were excluded by a casino are lured into another which was unscrupulous enough to take them in.
UK trade group BGC reported that more than 200,000 UK gamblers used a black market site last year. According to traffic data quoted by the BGC, black market sites drew 27 million visits from UK IP addresses last year alone.
With a looming potential £2 cap on online slot stakes, the problem looks set to get worse before it gets better.
Black market growth
Off screen and “friendly” gambling are nothing new. Entities have been betting among themselves and into gray and black markets for years.
Illegal horse racing exchange Citibet is said to turn over $50 billion annually in Asia, for example. And the flow of money into the black market shows no sign of slowing down.
Black markets as a haven for money launderers, to which operators can turn a blind eye, or encourage, because they are free of governmental checks and balances. Meanwhile, they can offer higher payout rates which allows dirty money to be laundered at a lower cost.
What can you do as a player?
Keep in mind to always research a casino, even before registering (using sites like ours). Licensing is a immediate giveaway too. Check out our guide right here.
