Online gambling — over-regulation causes the black market to flourish

Online casinos, sports books and mobile slots sites have flourished because regulators gave them the credibility needed. When the first online gambling establishments were founded punters were reluctant to sign up for an account and deposit money. It took a while until prestigious regulatory bodies gave them the credibility needed to convince hesitant players. Today, it seems that overregulation can hurt the business and act as a catalyst for the black market.

Black market operators are rising
The UK is regarded as an example of a successfully regulated market. The online casinos and slots sites catering to local players need to secure a gambling license from the UKGC (United Kingdom Gambling Commission). This is a strict regulator that doesn’t make compromises when it comes to giving its seal of approval for online casino operators looking to offer casino and online slots games found on this page here. For UK players, this has been a refreshing thought, as they were certain to gamble at trustworthy partners.

In recent years, the rules got stricter and some casinos accused the UK GC of over regulating the industry. They claim that the limitations in conjunction with higher taxes have pushed the business to the brink. A recent report made by PwC also suggests that over-regulation is benefiting black-market casinos. These are not subject to the authority of the Commission, so they thrive when regulated casinos struggle.

At the time of writing, the black market in the UK accounts for just a bit over 1% of the total turnover. This is a small number, but the fact that it is rising on a yearly basis is far from encouraging. Licensed and regulated casinos are compelled to accept the new restrictions, otherwise they would lose their license. Black-market operators are more agile in this regard and their profit margins are not affected.

Over-regulation hurts European casinos
The UK gambling market has long been cited as an example of sensible regulation, compared to its European counterpart. Apparently, this is no longer the case and the latest measures have made the UK a more difficult country for gambling operators. In their quest to better protect customers from the risk of gambling addiction, regulators have erected new obstacles for online casinos. They were successful in their initial mission, but the measures have negative consequences for the operators.

A thorough analysis of the restrictions imposed in Europe and the UK, highlights the fact that some of them are stricter on the island. Not surprisingly, hundreds of thousands of people have used unlicensed gambling operators in the last couple of years in the United Kingdom. The regulators are not fazed by the reports and insist on creating the safest gambling environment possible.

From the authorities’ point of view, it is unacceptable that players are exposed to the risk of gambling addiction and financial ruin. Finding the balance between regulations and a level playing field is an art that the UK GC needs to master. Otherwise, driven by their good intentions, regulators will make it difficult for licensed casinos to thrive, while inadvertently boosting black-market casinos.