Gambling Commission study links black market use to problem gambling risk

The Gambling Commission has published a study of customer transactions showing that people who use illegal gambling sites are far more likely to show signs of problem gambling than those who stick to licensed operators, SBC News reported.

The regulator examined transactions with both legal and known illegal gambling sites and found that 45% of people transacting with illegal operators had a Problem Gambling Severity Index (PGSI) score of eight or more. Among those transacting only with licensed firms, that figure was 6%.

A further 16% of illegal-site users scored three to seven on the PGSI scale, against 8% of those using licensed operators. The Commission suggested the gap may partly reflect self-excluded customers turning to non-Gamstop sites to bypass their exclusion from the regulated market.

An industry source told SBC News that campaigners focused on the regulated sector were ignoring the risk posed by illegal sites. "People are closing their eyes to the threat illegal sites pose – not least the campaigners who spend all their time shouting at the regulated sector," the source said, adding: "You can't hope a problem away."

The study is based on a small sample: 179 individuals' transactions, with PGSI scores recorded for 146 of them. Participants were mostly male with an average age of 44, meaning the findings cannot be extrapolated across the entire UK gambling population.

Dan Waugh, partner at gambling advisory Regulus Partners, said the scale of the survey was limited but its direction was not surprising. "It's a small-scale study survey," he said. "However, the results showing that people playing in the black market are significantly more likely to be at risk of harm are consistent with the wider research literature. They reinforce concerns about growth in unlicensed gambling."

The Commission also tracked how long customers kept transacting with illegal sites once they started. Average monthly transactions began at 4.9 in the first month, fell to 1.8 in month two and 1.4 in month three, rose again to 1.9 in month four, then settled at 1.2 and 1.5 in months five and six.

That pattern suggests that while gamblers still transact far more often with licensed firms overall, those who try an illegal site tend to keep returning to it.

The findings land as licensed operators face tighter compliance duties, including Financial Vulnerability Checks and Financial Risk Assessments, alongside higher taxation. The government's latest budget raised Machine Games Duty to 25%, on top of a prior increase in online gaming tax, giving the industry fresh reason to point to the untaxed and unregulated alternative.

A spokesperson for Flutter UKI, which operates Paddy Power, Betfair and Sky Bet, said the figures underlined the stakes. "The Gambling Commission figures highlight why it is so important for the government and the regulator to tackle the illegal and unlicensed market," the spokesperson told SBC News.

The study does not let the licensed sector off entirely. The Commission found that 91% of people who transacted with illegal firms also gambled with licensed operators at the same time, describing "substantial overlap between the two". If illegal-site use correlates with problem gambling, that overlap means a significant number of at-risk customers are still active within the regulated market as well.

The exclusion of lottery transactions from the 6% licensed-sector figure may also prompt pushback from bookmakers and casino operators, who have long argued the National Lottery should face the same scrutiny as the rest of the regulated industry.