UKGC to tap into data to analyze size of black market

The UK Gambling Commission (UKGC) is going to leverage new data sets to ensure that it has a better grasp of the real size of the black-market operations, i.e. unlicensed gambling websites that target Britons.

UKGC makes the first step in understanding the size of black-market operations

This is the latest major commitment from the British gambling watchdog to ensure that it has a firm understanding of the sector, including the number of problem gamblers and now – the number of unlicensed websites and what impact they have on the market.

The exact number and percentage of black-market operations have been the talking point of not just British industry doves and hawks. In places such as Germany and Sweden, the black market has been the subject of fierce debate, with independent critics arguing that the official data available is understating the size of these operations.

The regulator will also seek to explore why consumers are turning to the unregulated market in the first place. Trade groups such as the Bettingand Gaming Council (BGC) in the United Kingdom and the Swedish Gambling Association (BOS) in Sweden have insisted that consumers turn to unregulated gambling websites as they find regulated gambling sites’ offers unsatisfactory.

This is explained by the restrictive gambling laws that regulated online gambling operators have to face. In a statement, the UKGC has elaborated:

"With a better understanding of why and how consumers access unlicensed gambling websites, we can identify ways in which we can use data to identify unlicensed websites and make estimates of their usage by consumers."

The UKGC is going to use both web traffic data with gambling behavior data in the hopes of accurately estimating the size of the black market by using the gross gaming yield as its principal benchmark.

This methodology has already been tested in the regulated gambling sector, using data from regulated websites to see if the method can adequately assess the gross gaming revenue.

What makes people head offshore and play?

The UKGC explained that there are many reasons why consumers may turn to the offshore market, including the aforementioned "better offers," but also people’s motivation to avoid the know-your-customer documentation checks, which are set to become prevalent in the country, as well as people who already have a tenuous relationship with gambling and have listed themselves on GAMSTOP and cannot, therefore, access regulated gambling.

The UKGC has acknowledged that there are inherent limitations to the accuracy of its model and has outlined the contentious points of its testing process.

The regulator has also cautioned that this is only a first step in truly understanding the scale of the unlicensed market, and that by taking an iterative approach that focuses on transparency, the watchdog is hoping to get more stakeholders onboard who could contribute actionable insight that allows the regulator to do better with the task at hand.

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