The UK Gambling Commission (UKGC) is launching a groundbreaking study on the black market to strengthen the monitoring of unlicensed online gambling. This study, expected in spring 2025, will serve as the UK’s most comprehensive effort yet to address the growing issue of illegal gambling by assessing player behaviour and identifying ways to track unlicensed sites.

Understanding the scope of the black market

The UKGC aims to quantify the scale of the unlicensed gambling sector by using web traffic data, search term monitoring, and player behaviour analysis. Combining this data with estimates of average player spending, the commission hopes to determine the gross gambling yield (GGY) for illegal sites. Based on data from over 139,000 accounts across major UK operators, the commission currently estimates the average GGY for online slots alone to be £0.32 per minute. However, it acknowledges that its methodology, based on 2018-2019 data, may not fully account for high-spending consumers in other categories like sports betting.

Monitoring techniques and future directions

To track unlicensed sites, the UKGC is using tools like Google Trends and Similarweb to monitor search terms that lead consumers to illegal gambling options. By analysing the top search results and affiliate links, the commission identifies unlicensed sites accessible to UK players. The UKGC is also exploring the role of social media and streaming platforms like Twitch, Kick, and encrypted messaging apps, which may indirectly drive traffic to these black-market websites. The commission encourages licensed operators to contribute data to refine this detection methodology, emphasising that tackling the unlicensed market requires collective effort.

Similar challenges across europe

Regulators in the Netherlands and Sweden have also observed challenges in estimating the scale of their black markets, particularly as players often spend more on unlicensed platforms than licensed ones. The UKGC notes similar trends in its study and suggests that unlicensed sites may foster different spending habits due to fewer consumer protections.

Proposed tax hikes spark industry backlash

Simultaneously, UK gambling operators are grappling with potential tax hikes that could significantly impact their profits. Recent reports indicate that the government may double certain gambling taxes, aiming to raise £3 billion. The Institute for Public Policy Research (IPPR) proposes increasing the remote gaming duty from 21% to as high as 50% for “higher harm” products like sports betting and slot sites, while the Social Market Foundation (SMF) suggests a smaller rise to 42%. These proposals have already triggered share price drops across major operators, including Entain, Flutter, and Playtech.

Industry concerns over proposed tax increases

Stakeholders warn that drastic tax hikes could backfire by pushing consumers to the black market. The Betting and Gaming Council (BGC) argues that excessive taxation could lead to job losses and reduced sports funding, while also impacting related sectors like horseracing. “A damaging and self-defeating tax raid cannot be ruled out,” says Regulus Partners, which anticipates that operators may be forced to cut marketing and operating costs if tax increases are too severe. Similarly, Goodbody analyst David Brohan projects a moderate increase—between 3% and 5%—as a more sustainable approach.

European context and industry reactions

If implemented, the UK tax hike would follow similar trends in Europe, with the Netherlands set to raise its gambling tax from 30.5% to 37.8% by 2026. Dutch industry leaders warn that such increases risk pushing players to unregulated sites, while legal operators face rising costs that could lead some to exit the market altogether.

Gambling industry pressures

As the UKGC intensifies its monitoring efforts and the government contemplates tax hikes, the industry faces challenges on two fronts. While the UKGC’s study aims to tackle black-market proliferation through enhanced detection, policymakers must weigh the potential for tax hikes to unintentionally fuel the unlicensed sector. With significant implications for jobs, sports funding, and consumer safety, the debate over gambling regulation and taxation will likely continue to evolve.

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