Regulation

Online Gambling Overregulation Pushes People to Black Market

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A new report from the accounting and consulting firm PwC suggests that the overregulation of the online gambling sector in the United Kingdom may push people towards using the unregulated black market offerings.

Details of this new report

This report was commissioned by William Hill and GVC Holdings (the owner of Coral and Ladbrokes). According to the firm’s research, the black market in the UK for gambling currently accounts for about 1.2% of total turnover or £1.4 billion.

With regulations constantly becoming tighter on the regulated sector, the number of these black market operators is ever increasing.

Some of the latest restrictions either already or set to come into effect include restrictions on the use of credit cards when depositing funds to online gambling accounts and increasing the number of due diligence checks when signing up and using an online gambling platform.

According to this report “Further regulation may lead to frictions in the customer experience and drive gambling further into the black market.”

Interesting findings from the data

In order to compile this report, PwC used data collected from 3,000 gamblers in 2018. The report did note that most of these new restrictions have been made to add further protection to customers. These also protect the industry from unfortunate incidents, such as users racking up significant debts by using credit cards and the likes.

However, Andy MacGilp, a PwC partner did say that as a result of these restrictions, there are “potentially unintended consequences”.

The report states that any type of friction in the customer experience can drive these people into using black market offerings. According to figures outlined in the report, there were roughly 200,000 people in the UK in 2018 that at some stage during the year used the services of an unlicensed online gambling operator.

Comparing to other European markets

When casting its net wider, PwC found that there were even stricter restrictions in the wider European gambling market. This is because there are a lot more hoops for operators to jump through in order to legally offer online gambling platforms and there are more points of friction. This is why black market gambling is even more popular in other European nations.

Some of the reaction to this report

Reacting to this report was Wes Himes who is the interim Chief Executive of the Betting and Gaming Council. This is a relatively new gambling industry association. While he admitted that some of these restrictions are badly needed, the urges there to also be a balance.

He said: “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 went on to reference other cases in Europe which highlight the need to find the delicate balance between friction points and protecting players from unregulated risks.

However, the United Kingdom Gambling Commission took a different stance on the issue. A spokesperson said that the gambling sector first needs to get its own house in order.

They said that it is up to the UKGC to worry about tackling operators that don’t have a license. The gambling industry has to focus on continually raising its standards to ensure that gambling is fairer for consumers across Britain.

Andrew O’Malley has a BSc in Economics and Finance. He has worked in the finance industry as a risk analyst and now he is pursuing a career in writing. In recent years, he has written for a number of leading publications, focusing particularly on the areas of gambling, finance and cryptocurrency. He has worked closely on projects evaluating online casinos and bookmakers, as well as reporting on industry news. Andrew is a sports fanatic and can be found glued to any and all types of sports each weekend. As an Irishman, he loves his Gaelic Games, as well as closely following football, golf, horse racing, rugby union, tennis, American football, basketball and MMA. Contact him at Andrew@beanstalk.io

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