Some time ago, when Telegram’s founder Pavel Durov was arrested in France for facilitating illegal transactions and for insufficient cooperation with law enforcement, it was also revealed that Telegram hosts numerous illegal gambling platforms, particularly those operating with cryptocurrencies.
Also, this year, one could read about increased efforts to dry out the black market, i.e., to stop those operators that do not hold a license in a specific country. For instance, the Dutch regulator cracked down on illegal gambling advertisements, and the Portuguese online gambling association sued influencers on Twitch for promoting illegal gambling offerings. Moreover, Germany attempted to reduce the black market by empowering the GGL to fine licensed operators who collaborate with affiliates featuring non-licensed operators. Additionally, Germany reached an agreement with Google to ensure that only licensed operators and affiliates are allowed to advertise on its platform.
A GROWING BLACK MARKET
For over twenty years, the threat of a thriving black market has been used as the strongest argument to push governments into changing their policies. Indeed, it has played a significant role in shaping quite competitive and viable laws across many states. However, as the above examples show, no matter how laws are amended or whom authorities choose to sue or fine, there will always be new and creative ways to bypass regulated markets.
In our increasingly globalized world, where new products, technologies, and channels emerge rapidly, it is not viable to entirely eliminate bad actors. The unregulated market will continue to offer better financial incentives and less oversight, regardless of how liberally a law is drafted, how quickly it is adapted, or how strictly it is enforced.
Furthermore, it is nearly impossible to accurately quantify the size of a black market. By its very nature, a black market is hidden, and any data collected can only be obtained indirectly, whether through surveys (which are often inaccurate), assessments of the regulated market, extrapolations, or comparative data. Even these methods are problematic because there are no international standards that allow for a fully valid comparison. For example, while the GGL emphasized that illegal gambling activity in Germany was around 4% in 2023, a report from the University of Leipzig in the same year estimated the black market to be as high as 48.8%.
PROMOTING A REGULATED ENVIRONMENT
Perhaps it is time to also consider shifting the focus from arguing against the black market and begin promoting the advantages of the regulated market more actively? There are several compelling reasons why the white market is attractive to the average player beyond just a competitive product offering:
- Ease of access: Players can easily register and play without needing to be IT or financial experts. No VPNs, cryptocurrency wallets, or foreign accounts are required.
- Financial security: Regulators ensure that deposited funds are safe and available for withdrawal at any time.
- Legal recourse: Players can seek legal redress in local courts if any issues arise during their gambling experience.
- Tax exemptions: In many countries, gambling winnings are not taxed. Only a few countries impose taxes on winnings, and even then, they are generally low.
- High liquidity products: For games requiring significant liquidity, such as poker, tote betting, or jackpots, legal websites with larger player bases offer a better experience.
- No potential legal consequences for players: In some countries, it is illegal for customers to gamble with unlicensed operators, making legal platforms a safer option.
- Monitored gambling behavior: Licensed operators monitor gambling patterns and alert players if potentially harmful behaviors are identified. They offer advice on where to seek help and much more.
- Professional customer service: Well-trained and regulated customer service teams are always available to help with both minor and major issues.
- Regular audits: Licensed operators are frequently audited, ensuring that no manipulation or fraud occurs within the games.
Many players are unaware of how rigorous regulatory controls are and how safe it is to gamble with licensed operators. Promoting these advantages more could support steer consumer demand toward the regulated market. So far, promotional efforts highlighting the many advantages of licensing have not been the focus of marketing campaigns.
Nonetheless, there may be some change on the horizon. Brazil appears to be taking a more complex approach, betting on a combination of effective payment blocks, social media oversight, and strong campaigns promoting the benefits of the regulated market. Plinio Lemos Jorge, president of Brazil’s National Association of Games and Lotteries (ANJL), has emphasized the importance of clear, commercial communication that realistically highlights the advantages of regulated gambling. Campaigns about safe gambling, launched by Brazil’s Secretariat of Prizes and Bets (SPA) and supported by licensed operators, will also bolster this strategy. Now, it is, of course, too early to determine whether this approach will succeed, but it is already promising to see to which extent Brazil understands the many roads that can lead to a successful channeling.