Overregulation could drive growing UK black market, warns operator-backed study
New PwC research, funded by William Hill and GVC, finds UK black market stakes of approximately £1.4bn
The growing amount of UK regulation could drive more gambling consumers to the black market, a new report from PwC, and backed by GVC and William Hill, has warned.
The study found the ‘active’ black market in the UK is worth £1.4bn in stakes, or just 1.2% of total turnover, but the report warned the risk of this figure growing is “high”.
Specifically, the report warned of the increased friction of requirements like upfront age verification checks, enhanced due diligence checks, affordability checks set to be introduced next year and credit card restrictions currently in consultation.
“Further regulation may lead to frictions in the customer experience and drive gambling further into the black market,” the report said.
According to PwC, almost half (47%) of UK gamblers are aware of unlicensed gambling operators, with higher spending gamblers (56%) more likely to be aware of unlicensed gambling operators versus lower spenders (39%).
The overall channelisation rate of around 98+% is significantly higher than other licensed jurisdictions, but PwC partner Andy MacGilp warned the survey could underestimate the actual number, with black market spend driven by high net worth individuals who may not be captured in the PwC survey of 3,000 UK gamblers.
PWC partner Andy MacGilp
MacGilp said the study was funded by William Hill and GVC but PwC had carried out the analysis independently.
Wees Himes, the interim CEO of the Betting and Gaming Council, 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.
“Lessons from elsewhere in Europe show that it is a delicate balance of creating friction points with players and the risks of players moving to unprotected environments.”
Based on third-party estimates, Spain, Italy and Bulgaria have between 5 and 20% of activity in the unregulated space, while Portugal and France range between 10 and 40%.
Swedish regulators recently claimed a channelisation rate of more than 90%, but several operators and stakeholders in the market have pushed back at that figure, suggesting it is much lower in betting and casino.