The UK online gambling sector is facing an unprecedented challenge as illegal, unlicensed operators increasingly infiltrate the market. The rise of the black market is not only a financial concern but also a significant threat to vulnerable players.
The Gambling Commission recently released a report highlighting critical issues surrounding the migration to illegal gambling. Two central questions arise: Who is most at risk of turning to black market gambling? And what measures can be implemented to mitigate this shift?
The answers are complex and, for many, alarming.
A major insight from the Gambling Commission’s report challenges the prevailing assumption that only self-excluded individuals and underage users are drawn to the black market. Instead, the research indicates that the demographic profiles of those participating in both legal and illegal gambling are remarkably similar. This group typically includes men, young adults aged 18-24, frequent gamblers, and individuals scoring 8 or higher on the Problem Gambling Severity Index (PGSI).
A consistent theme in the report is the gap in public knowledge about regulation, which poses a significant issue. Elizabeth Dunn, of the legal firm Bird & Bird, underscores this concern: The report reveals a troubling disconnect between the public’s recognition of the need for licensed operators and their understanding of how to verify these licenses. This gap is partly due to consumer awareness but also highlights the evolving sophistication of illegal operators in recent years.
Alasdair Lamb from CMS notes a critical point: Most individuals interacting with illegal sites also engage with legal gambling platforms, indicating a preference for legal options whenever possible.
This situation presents both a challenge and an opportunity for regulators and operators. Dunn emphasizes the need for proactive educational campaigns to bridge the knowledge gap, aligning with the Gambling Commission’s recommendations. The Betting and Gaming Council (BGC) echoes this sentiment, citing a Frontier Economics study that estimates 1.5 million Brits are gambling on illegal sites, spending as much as £4.3 billion annually.
“Illegal gambling websites draw in a concerning variety of customers,” a BGC spokesperson stated, noting that over 20% of 18-24-year-olds who gamble have used unregulated sites. Many of these black market platforms target the most vulnerable individuals, such as those who have self-excluded from regulated operators.
The BGC warns that without balanced regulation and fair taxation, more mainstream consumers could be driven into the black market, threatening public safety and diverting funds from licensed operators and the Exchequer.
The Gambling Commission’s findings face challenges from differing perspectives. At events like the Peers for Gambling Reform forum, it was suggested that only self-excluded players and minors were at risk of black market gambling. Ismail Vali, CEO of Yield Sec, argues this is a misinterpretation due to the Commission’s exclusion of minors from its survey data. His company employs advanced data analysis to monitor black market activities in the UK, releasing a report earlier this month.
Vali asserts that legal gambling participants turn to illegal options when they have no other choice. Yield Sec’s findings highlight that a significant portion of black-market engagement is driven by targeted SEO strategies and not by widespread consumer choice. The company reports a sharp increase in black market activities, estimating its market share has increased from 0.43% in 2020 to nearly 9% in 2025.
At the heart of this issue is GamStop, the UK’s self-exclusion scheme. Since 2018, over 600,000 users have registered to exclude themselves from all UK-licensed sites. GamStop acknowledges the challenge of stopping illegal operations but remains committed to removing illegal advertising and working closely with the Gambling Commission.
An Ipsos evaluation of unlicensed gambling users showed that only 8% of over 4,600 respondents had used illegal operators. However, this stance is met with skepticism. Vali suggests that the threat is being downplayed, warning that unless properly addressed, the number of users on illegal platforms will continue to grow, especially as illegal streaming sites gain popularity.
Responsibility for ensuring a safer online gambling environment in the UK, Vali argues, lies chiefly with the Gambling Commission and GamStop. “If you’re promising safety with schemes like GamStop, you must deliver on that promise,” he insists. “The current landscape fails to protect consumers adequately.”
Vali urges immediate action against the supply chain, advertising, and social media content linked to illegal gambling. This is where changes can be made swiftly and effectively.
Elizabeth Dunn of Bird & Bird highlights the regulatory challenge facing the industry. She points out that the Gambling Commission faces limitations in taking action against unlicensed offshore operators. The Commission has increasingly turned its focus toward the regulated B2B market to curb the supply of games to unlicensed operators, a strategy likely to continue.
The future of the UK online gambling market hangs in the balance as it contends with the growing influence of the black market. The path forward requires coordinated efforts from regulators, operators, and industry stakeholders to safeguard consumers and maintain the integrity of the licensed market.
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