Will a Toughened Gambling Act Push More Punters Towards the UK’s Black Market?

Man In Hood Using ComputerThe UK government’s review of the Gambling Act 2005 gets underway next week, and it is suspected that major reform will be in the offing.

While The Guardian’s report appears to call for the most draconian measures possible, the review will probably touch upon some or all of these areas:

  • A ban on gambling firms sponsoring sports
  • Wider curfews on gambling-related advertising
  • Limits on online stakes
  • More stringent affordability checks
  • Powers to tackle the ‘parallel’ market

Those three bottom points are particularly interesting. Once you start limiting the stakes of players, especially high rollers, and making judgements on what they should or shouldn’t be spending on their betting, then guess what? You push them towards the black market….or, should we say, the ‘parallel’ market.

But does the UK have a betting black market?

What is the Gambling Black Market?

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By now, most of us are familiar with the concept of VPNs – Virtual Private Networks that allow us to essentially ‘convince’ our computers that we are in a different country.

While used for a variety of legitimate reasons both in business and personal use, the truth is that VPNs are used for nefarious means as well – and we’re not just referring to the technique used to pick up the American version of Netflix (but you didn’t hear that from me).

VPNs are being used to access overseas betting sites too, many of which have less rigorous regulation to adhere to with regards to player limits and responsible gambling.

And, according to research findings from the Betting and Gaming Council (BGC), the number of punters accessing this so-called black market is rather alarming. According to the BGC, searching for basic gambling-related keywords in Google brings up results where 38% of the operators listed are unlicensed within the UK market.

Some overseas firms, like those licensed in Curacao only, are far more relaxed when it comes to verification and age checks, and the BGC is concerned that children are able to register with a black market firm using their VPN and without cause for providing age-based ID.

All told, there is a staggering 27 million visits to black market operators every year from UK located IP addresses, and that related to around 200,000 punters placing bets with them. The BGC believes that this unique black market is worth £1.4 billion annually.

So yes, there is a gambling black market, and if the government plans on restricting punters with stake limits and affordability checks, would you wager that this market will get bigger or smaller as a result of Gambling Act reform?

Will the Government Introduce Online Stake Limits?

When the UK government decided to introduce a maximum stake of £2 – down from £100 – on FOBT machines, it sent shockwaves through the industry.

Indeed, it directly led to redundancies and shop closures – all of the major bookmaking firms have confirmed this, and so if the government plans on introducing stake limits they should be very careful, as more people will find themselves out of work.

No further details have been offered as to what may or may not happen in terms of online stake limits, however rumours suggest that a limitation of stakes on online slots – perhaps between £1 to £5 within a specific timeframe – could be introduced in line with the clampdown on FOBT machines.

That would have major ramifications for betting firms – who operate their online casinos as a secondary source of revenue, but obviously more so for specialist casino brands.

Again, what would be the outcome? There are thousands of unlicensed online casinos that are accessible with a VPN, and these have no such limits in place. Does the government want to force more players in this direction?

What are Affordability Checks?

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A proposal from the Social Market Foundation (SMF) has indicated that a £100 cap on gambling spending per month should also be implemented.

Perhaps the government will be looking at adopting something similar, and the words ‘affordability checks’ have been bandied around on numerous occasions.

As part of the verification process for new players, and this will likely be backdated for existing customers, betting firms could request information on annual income to determine how much each individual can afford to spend every month.

Whether the government gives such a concept the green light in their Gambling Act reform remains to be seen, but punters are warned that the current landscape for betting is likely to change quite considerably.