PwC report stokes fire of debate on scale of the illegal online gambling black market threat

The Betting and Gaming Council (“BGC”) has today (4 February 2021) published a PwC report dated 3 February 2021 entitled “Review of unlicensed online gambling in the UK” (that you can download below).

The objective of the PwC study behind the report is described as having been:

“… to provide an objective, evidence-based review of unlicensed online gambling in the UK, including consideration of the following:

    • number of unlicensed operators that UK consumers are exposed to through key marketing channels
    • accessibility and ability for UK consumers to create an account with unlicensed sites identified
    • awareness, usage of and spend with unlicensed operators and
    • a comparison of these metrics to our previous work in 2018/19″

The report’s conclusion reads as follows:

In this review, we have found evidence for the existence and growth of unlicensed online gambling in the UK.

Whilst unlicensed operator websites appear to be less visible to unsuspecting UK consumers now than they were in 2018, there is evidence of growing usage and spend with unlicensed operators.

  • Our analyses have shown that usage of and spend with unlicensed gambling operators has grown significantly in the last 1 – 2 years (albeit remains relatively low by international standards) by c.£1.4bn of stakes and 260,000 consumers
  • This has occurred even though awareness of unlicensed online operatiors has remained broadly stable, consumer exposure within Google search results has declined and UKGC continues to take enforcement action against unlicensed operators

As unlicensed gambling poses risks to player protection, sporting integrity, anti-money laundering and tax collection, the size and growth of this market should be considered as a meaningful issue for the industry.

Publication of this report is particularly timely given:

  • the almost contemporaneous (a) posting on YouTube of a BGC video highlighting the threat posed by the illegal online black market and (b) publication of a letter dated 15 January 2021 from Neil McArthur (Chief Executive of the Gambling Commission) to Carolyn Harris MP (Chair of the Gambling-Related Harm All Party Parliamentary Group, on the nature, scale, and disruption of illegal gambling in the UK, in which he stated: “We know that licensed operators and their trade bodies are concerned about the impact of the illegal market, but our own evidence suggests that the impact may be being exaggerated”, on each of which we have commented in a previous posting entitled “BGC and UKGC clash over scale of illegal online black market threat”; and
  • the content of a DCMS Consultation on proposals for increased Gambling Commission fees (published on 29 January 2021) in which:
    • one of the justifications for such increased fees is stated to be “increasing risks associated with unlicensed operators and the need to protect consumers and the industry from ‘black market’ encroachment” and
    • the Commission is reported to have said that “its understanding of the exact scale of this issue needs to be improved”.

Commenting on the report, the BGC states as follows on its website:

Betting and Gaming Council warns about “dangers of complacency” as number of British punters using black market sites more than doubles

The number of British punters using black market websites to place bets has more than doubled, a new report reveals today.

It comes as the Betting and Gaming Council warns of “the dangers of complacency” about the threat from unlicensed and illegal gambling operators.

The report commissioned by the Betting and Gaming Council from PwC published in full today – ‘Review of unlicensed online gambling in the UK’ – is a brand new 66-page document based on data collected during November and December 2020.

It highlights a series of worrying trends, including a doubling of the money staked with unlicensed operators – a jump from £1.4bn to £2.8bn – compared to a similar study in 2019.

The new data also shows the number of customers using an unlicensed betting website has grown from 210,000 two years ago to 460,000.

The report also highlights worrying global trends that show the size of the black market in other countries.

The findings came as the Government conducts a Gambling Review, which has formally and specifically asked for information about the black market as part of its ‘Call for Evidence’, following widespread concerns raised by a number of parliamentarians (see notes to editors).

Fears have also been expressed, including from senior horseracing figures, that the ongoing Gambling Commission consultation on affordability risks forcing ordinary punters towards the black market if checks on their income are too intrusive and onerous.

The BGC, the industry’s standards body, continues to support further changes to the regulated industry, but is urging ministers to make sure any brought forward as a result of the Gambling Review are carefully thought out.

Michael Dugher, the BGC’s chief executive, said:

“This new report by PwC is an impressive and comprehensive piece of work which demonstrates how the unsafe, unregulated black market is a growing threat to British punters.

These illicit sites have none of the regulated sector’s consumer protections in place, such as strict ID and age verification checks, safer gambling messages and the ability to set deposit limits.”

Mr Dugher said that as head of the standards body representing the regulated betting and gaming industry he welcomes wholeheartedly the Government’s Gambling Review.

And he added:

“It is important to stress that the big increase in the black market is not an argument against more changes to the regulated industry, but an argument that we need to get them right.”

On the number of British punters using black market sites, the report by PwC report says:

“Based on our survey, the proportion of UK online gamblers using an unlicensed operator has increased from 2.2 per cent to 4.5 per cent in the last 1-2 years. This equates to an increase from c210,000 players in 2018-19 to c460,000 in 2020.”

It goes on:

“A sizable and growing share of stakes is placed with unlicensed sites, growing over the last 1-2 years broadly in line with usage (ie doubling). Those that gamble with unlicensed operators still almost always gamble with licensed operators as well.

Our survey found that share of online stakes with unlicensed operators had grown from 1.2 per cent in 2018/19 to 2.3 per cent. This corresponds to a doubling of stakes with unlicensed online operators from £1.4bn to £2.8bn.”

The new report also suggests that the size of the online black market is larger in countries where the regulated betting and gaming sector is less competitive.

It points to countries including France, Norway, Italy and Spain – which have tougher restrictions on licensed operators – as examples of nations where the black market share is bigger than in the UK.

The report says:

“This analysis suggests that the UK has a more ‘open’ online gambling market and currently has a smaller unlicensed market share than our European benchmarks.

Whilst it is not possible to isolate the impact of individual regulatory characteristics, the above assessment suggests that jurisdictions with a higher unlicensed market share tend to exhibit one or more restrictive regulatory or licensing characteristics.”

Mr Dugher added:

“I know this evidence is inconvenient to those who seek to dismiss and play down the threat of the black market, but there is a real danger of complacency. The UK risks sleep walking into changes where the main beneficiary is the unlicensed black market. We all have an interest in getting future changes right, so must take heed of this latest evidence and look at what is happening elsewhere around the world.”


1. The BGC has reproduced on its website an article by Lord Dave Watts (a member of Peers for Gambling Reform and a former chair of the Parliamentary Labour Party) entitled “The right way to regulate the betting industry – History teaches us that appropriate regulation can be good for the gambling sector” that originally appeared in the New Statesman on 29 January 2021. You can download it below.

2. In a letter dated 8 March 2021 (that you can download below), the Gambling Commission responded to a request by Lord Foster of Bath (Chair of ‘Peers for Gambling Reform’) for its analysis of the above-mentioned report commissioned from PwC by the BGC. In that letter, Sarah Gardner, the Commission’s Deputy Chief Executive confirmed that “we stand by our analysis of PWC’s previous report and our view that its content should be considered with a degree of caution. This was communicated to the APPG for Gambling Related Harm in our letter dated 15 January 2021 to which you refer”. You can access the Commission’s letter of 15 January 2021 in our separate website posting here.