Over Regulation the Reason For the UK’s Growing Black Market Online Casinos

Better bonuses, anonymity, flexible payments, better odds/RTP and more provided as reasons for UK punters joining non-UKGC gambling sites.. (Image by PIRO from Pixabay)

After publishing a news report dissecting a survey published by the UK’s Betting and Gaming Council (BGC), it seems regulations are pushing players towards the black market.

– Better bonuses / free bets

– Ease of setting up an account

– Anonymity

– More flexible payment options

– Better odds/return to player

– A wider range of games available

Other reasons included: Avoiding deposit limits, avoiding providing documentation (affordability checks and source of income), and being able to bet more money.

The shock factor here is, all these reasons came above avoiding self-exclusion. Therefore, if we go by the survey’s stats, black market casinos are not explicitly targeting self-excluded players.

It is undeniable that survey respondents who do play at black market casinos have given other reasons that all lead to one reason – over regulation.

You can see the full stats from Jack Bannon’s original report – UK Unveils Billion Sterling Black Market.

Have UK Gambling Reformists Shot Themselves in the Foot?

The Casinoplusbonus news team saw this coming a mile off. However, we can’t blame the UKGC and the UK government for making an effort to clamp down on problem gambling.

The question is, are the stricter rules that send players to non-UKGC casinos now becoming counter-productive? And I think the large majority of us are going to say the answer is yes.

Just take a look at the accompanying table pulled from the UK casino page here on Casinoplusbonus. The rules for slots are now so strict it comes as no surprise that players want to play online slots and other casino games via a black market casino.

Operator Costs

The other worry UK operators face is the high cost of operating under the UKGC licensing framework.

• The new White Paper rules instigated a 1% levy for all online gambling sites. This, in turn, affects some of the points I will make below, such as ‘Better bonuses / free bets’ and ‘Better odds/return to player.’

• The increasing costs involved with keeping up with compliance rules to avoid hefty UKGC fines that can reach millions of UK sterling. Operators have to invest heavily in IT systems to keep up with constantly changing rules, which in turn also affects how much value gambling sites can offer UK players.

What Can the UK Do to Reverse The Damage Done?

The stats below come directly from yesterday’s report by Jack Bannon as well as via the survey published by the BGC. The percentages indicate the reasons given for playing joining black market online gambling sites by respondents who admitted they do not play on UKGC sites.

Better Bonuses (34.5%)

The expenses involved for a UK casino to offer its services in the UK do affect bonuses. There is currently a 1% levy on all operator gross gambling yield (GGY) on top of taxes paid doesn’t help.

On top of this, the strict rules on keeping tabs on players mean expensive IT systems. The additional costs eat into casino profits, and, of course, bonuses become less lucrative. Or maybe I should say less competitive to black market options.

Solution: Start to cut down on some of the costs applied to operators.

Ease of Setting up an Account (32.3%)

I am quite surprised that players would avoid playing under the protection of the UKGC and Gambling Act so that they can sign up faster. If players want to forfeit security and safety to shave a few minutes off their signing-up time, I would say this is not a smart move.

Solution: It’s a tough one. Maybe try to educate players more about the protection offered by playing at UKGC casinos. Or find a way to spread out documentation requirements.

Anonymity (30.9%)

The survey conducted should have had a response that specifically recognised cryptocurrency. It didn’t. Every non-UKGC casino still requires a KYC check, so maybe some players choose these casinos for anonymity from the UK government.

With that said, I suspect this is all about being able to gamble using cryptocurrency.

Solution: Integrate cryptocurrency gambling into UK online casinos.

More flexible payment options (29.6%)

This is why I find it strange there is no mention of cryptocurrency in the survey as a reason for choosing to play at overseas online casinos. It is almost as if they are scared of the truth.

If crypto came out on top, then there would be no denying that most players head over to black market online gambling sites because they want to play using Bitcoin. However, I don’t think they want this glaringly obvious fact to stand out or demand for crypto in the UK online gambling market would become too strong.

Solution: Same as the above. Integrate cryptocurrency gambling into UK online casinos.

Better odds/return to player (29.6%)

The reason black market sports books and casinos are able to offer better odds is because they have a couple of advantages. (A) They have a far wider reach globally and so they can potentially make higher profits (B) The costs involved with the licensing, which is usually Curacao, is far less than an operator would need to pay to operate a gambling platform in the UK.

One issue, which I mentioned above is the 1% levy operators in the UK need to pay on top of taxes. It almost feels like the UK government wants to treat casinos as a piggy bank to reduce its fiscal costs.

Solution: Scrap the 1% levy idea for one. Plus, although casinos can write off the increased costs of implementing IT systems to prevent problem gambling and initiate affordability checks, give operators performance based tax incentives.

A Wider Range of Games Available (28.3%)

Like the ‘Ease of Setting up an Account’, this is a tough one to tackle. The licensing costs for a software provider to enter the UK market and supply online casinos with games is not cheap.

Most up-and-coming software provider don’t want to risk paying these costs until they have cracked let’s say the Malta Gambling Authority (MGA) and Curacao markets. It’s a tough ask for the UK to reduce its strict policies just allow more software providers into the market.

Solution: Make it cheaper for up-and-coming software providers to enter the UK market. Maybe use incremental licensing fees based on GGY. If the software provider is successful in the UK, then the additional fees should not hurt their business model.

This Would be my Top Priority if I Were a UK Policy Maker

If I were responsible for UK gambling law, my top priority would be to implement cryptocurrency as soon as possible. I believe this is one of the driving factors players are seeking out non-UKGC-regulated online gambling sites.

The UK is stubborn when it comes to cryptocurrency. However, one day it will need to recognise that there is no escaping it. The casino industry should be one of the first to take a stance and adopt crypto as a mainstream currency for online gambling.

Problem solved! In the accompanying table, you can see Jack Bannon has written warnings in the past about how over regulation could harm the UK online gambling industry. It feels like this latest survey issued by the BGC proves his theories could be correct.