Subscribe
Share
Share
Embed
A daily podcast delving into the biggest stories of the day throughout the sports betting and igaming sector.
Charlie Horner (00:02.006)
New gambling commission research found that one percent of repeat black market gamblers also used used licensed operators in the UK, a finding that challenges assumptions made by both the regulator and gambling licensees. The Commission stated that unlicensed operators benefit from easy sign up processes as UK licensees begin to I've gone again, haven't I? Yeah.
Ted Orme-Claye (00:22.68)
I've lost you Charlie.
Ted Menmuir (00:23.756)
Yeah.
Charlie Horner (00:26.894)
Yeah, we'll do it. It just it's every time we press record in this room, which is bizarre.
Ted Menmuir (00:28.462)
Yeah.
Charlie Horner (00:41.356)
Yeah, I'll I'll I'll just I'll just go again.
Charlie Horner (00:49.036)
New Gambling Commission research found that 1% of repeat black market gamblers also used licensed operators in the UK, a finding that challenges assumptions made by both the regulator and gambling licensees. The Commission stated that unlicensed operators benefit from easy sign up processes as UK licensees begin to introduce financial risk assessments as an extra layer of security. So today we look at the fine balance in maintaining player protection and keeping the customer away from black market actors.
Welcome back to iGaming Daily, supported by Optimove, the creator of positionless marketing and the number one player engagement solution for sports betting and iGaming operators. I'm Charlie Horner and joining me today is SBC Media's editor at large, Ted Manur, and SBC News editor Ted Or McClay. Ted how's things?
Ted Menmuir (01:40.674)
Very good surely. Good to be on Mondays pod and talk about this data.
Charlie Horner (01:49.57)
Very good. Ted O C, how are you?
Ted Orme-Claye (01:52.17)
I'm good thank you Charlie yeah fresh off an enjoyable weekend and ready to get stuck in.
Charlie Horner (01:59.138)
Yeah, well what what better way to to ring in a new week? By looking at some data dropped by the Exactly, exactly, yeah. So for people who are not so aware, this was a piece of research that the Gambling Commission has published after analysing bank accounts of of UK consumers. Ted what what drew attention t
Ted Orme-Claye (02:05.417)
A mountain of data.
Charlie Horner (02:28.619)
F for you from from the research undertaken by the gambling commission.
Ted Menmuir (02:33.437)
Okay, there are kind of some liabilities in this research that I think we're to talk about down the line, but for me, my attention is kind of caught on the overlap, which is 91 % of those with repeat detected unlicensed transactions also gambled with licensed operators. Now I'm taking that off the quote, but it just means that there is kind of crossover between players that engage with licensed operators and unlicensed operators. And it's actually
very high percentage. And it also kind of challenges that notion, the idea that using the black market necessarily means abandoning the regulated one altogether. And...
it raises, I think this should point towards kind of a more useful question about what, you know, gathering evidence and gathering evidence on players' habits with the black market and why they choose to engage with operators that they might know are illegal.
Charlie Horner (03:37.175)
Hm. Yeah, TEDLC, that's it's an interesting finding, isn't it, that people are are are sort of adopting both the the licensed sector and the the unlicensed sector. What what was your main takeaway from from this piece of research?
Ted Orme-Claye (03:51.624)
I do share the same one with Ted about the yeah, the fact that it looks quite apparent that a lot of people once they start gambling with an unlicensed firm continue gambling with the licensed sector. That it does deal a bit of a blow to one of the industry arguments that people just move completely on, but it doesn't completely discredit it in that, you know, it does show that people are like maybe in reaction to some new measures that they've come across in the licensed sector. Perhaps they're just starting to
Ted Menmuir (04:13.078)
Mm-hmm.
Ted Orme-Claye (04:21.237)
gamble with the unlicensed one as well. But yeah, but it shows that people aren't completely abandoning it. However, as some of the reactions that we've seen come into this show, it is still backing the industry argument that people are drawn to the black market. there's bit of a two way street on this one with how it relates to industry lobbying. The other takeaway I got from it though, is that I think it showed that a of...
Ted Menmuir (04:42.422)
Yeah.
Ted Orme-Claye (04:49.097)
A large proportion of people who were part of this sample who had a problem gambling gambling severity index of eight or more which is indicative of that you are suffering from problem gambling and that you need help basically I think it was 45 percent of people within the sample who had that pgsi score of eight or more were were were transacting with the illegal market So if I think that shows you that really the the big
the biggest customer base for these offshore unlicensed firms are people who are suffering from problem gambling. That's something that the industry has been arguing for quite some time. So I think some people from the sector will be feeling vindicated by that. Although obviously, know, vindication aside, this is something we should be very alarmed about. And I think it might also be indicative of...
Ted Menmuir (05:31.693)
you
Ted Orme-Claye (05:39.779)
Perhaps a subgroup within a subgroup of these people are those who are self excluded via Gamstop. We know that a lot of these offshore firms market themselves as non-Gamstop casinos, specifically going after vulnerable people who have excluded themselves from the licensed market. So yeah, I found that quite an interesting takeaway as well.
Ted Menmuir (05:42.209)
Mm-hmm.
Charlie Horner (06:01.421)
Yeah, I think i it you know, what some of the headlines came out that that you you you know you were maybe seven and a half times more likely to have a PGSI score of eight or more if you were using unlicensed operators off the back of that report. I'll just provide a little bit of background on how this report was put together. So the gambling commission looked at a various different transactions in in the bank accounts of of their their s sort of sample size of people. So there was
three thousand four hundred and twenty six different transactions that they monitored across one hundred and seventy nine different individuals. Ted does that create a a certain air of scepticism on this research? What what and what sort of feedback are you sort of getting on the back of this?
Ted Menmuir (06:48.141)
Okay, yeah, I mean, maybe the research depth of 122 people, you know, detecting kind of unlicensed transactions. I don't think it kind of, maybe there's a call for kind of more depth to be added there. But, you know, overall, I don't want to dismiss any kind of research on the black market or black market or illegal gambling trends, especially at a user level, because
you
There is just such a dearth of information out there and I believe that this is more useful than just neglecting it straight away. What makes this research relevant is that it observes transactions and it's not just, you know, we've seen a lot of kind of survey data before where you ask people to reflect on their habits. This is actually tracking players that have transacted, that have undertaken multiple transactions with unlicensed operators. And again, I also
think that we kind of need to move away from what is kind of the sample size more and just say focus on what the feedback is in terms of the 122 respondents and as Ted said is that they are part of a higher risk gambling segment that needs to be analyzed too and that needs to be catered within a framework which is not happening at the moment.
Charlie Horner (08:14.765)
Yeah, I know a lot of people are very cool Sorry, go ahead, Ted.
Ted Orme-Claye (08:15.426)
something else am I?
Ted Menmuir (08:17.975)
Hmm.
Ted Orme-Claye (08:18.936)
Something else that I just had for a second, but I think a question that might require a bit us to look a bit further into this one and for the authorities to look a bit further into is how are these people, if this data is so easily accessible by the commission and easy to be monitored, how are these people able to transact with these companies to begin with? If they're unlicensed and are, as the commission's called them, illegal firms.
how are people in the UK able to conduct these transactions with them that are clearly able to be monitored by the commission? Like this doesn't appear to be people depositing via crypto or something like that. This is via their own banks. So there is a question here around, know, how can we better fill those gaps between linking the industry, the commission and the financial sector?
Ted Menmuir (08:55.127)
Mm-hmm.
Ted Orme-Claye (09:10.924)
to kind of cut these companies off at the source. Because that's always been the big one really, isn't it? You know, we have all these conversations about how can you clamp down on the black market? it through a good way? It's through advertising. Fine, we talk about that around social media and the presence in in football and so on. But really, if you want to cut them off, you need to just stop people from being able to transact with them. And crypto is going to be difficult. We've always said that, you know, that that presents so many challenges of itself. But if people are clearly able to just do this via their own
Ted Menmuir (09:18.967)
Yeah.
Ted Orme-Claye (09:40.02)
standard banking practices. There's quite a big gap there.
Charlie Horner (09:44.078)
Yeah, I'll just go back to what Ted said about the you know building that evidence base because I think that's really important. We've we've often cited the need to to build actual factual evidence, not just built off you know, player player surveys in terms of their attitudes towards the black market, but actually concrete looking at that they act actually are transacting with with the black market. And okay, the the gambling commission does cite that there are limitations within its research.
Ted Menmuir (10:08.045)
Mm-hmm.
Charlie Horner (10:13.709)
particularly to do with the the sample size and and the fact that this was only done via open banking. But I think it's important that that groundwork is being you know, it's it's been done. It's and and there is work being done to to do this. So I think that's worth pointing out. But just before we go to a break, do you think that this research points towards the fact that we're making a lot of we're making a lot of assumptions as an industry and as as regulatory body.
In terms of looking at the way that people use illegal operators essentially. You know, we we've often said that if you increase taxes, people will just go offshore. If you impose financial risk assessment, people will just go offshore. Ted LC, what do you think?
Ted Menmuir (10:55.821)
Yeah.
Ted Orme-Claye (10:59.316)
Yeah, I mean, I think this really just hammers home the importance of nuance, doesn't it, to a lot of these things. Like I said earlier, I do think there is a credible argument here that a lot of the people with high PGSI scores who've been transacting the black market, I do think there can be a case there that some of these are people who are self-excluded from the licensed market, who won't be using it, who've just gone to the black market. But the fact that a huge majority of these people were gambling with both,
does show that there's some nuance here that people will gamble with both, even if maybe they're facing some new restrictions in the license market, they're still sticking around with it. Because if you're someone who's a problem gambler, you're going to gamble anywhere you can get. I think that's more the issue here, isn't it? So yeah, maybe they have come across some restrictions on some license sites, so they've just opened up an account with some other license sites where they've not had an account before, have started gambling there, they've set up some black market ones.
Ted Menmuir (11:40.725)
Yeah.
Ted Orme-Claye (11:57.593)
Yeah, it's just if you're if you're a problem gambler, you will gamble wherever you can surely that's the big that's that's the big problem here, isn't it?
Ted Menmuir (12:05.483)
I mean, look, tracking the black market and its developments across multiple markets. I think research like this kind of exposes that we need to kind of move away from treating black market participation as a simple journey by the user to unlicensed gambling. And I think what the sector needs to also find out is that you have to demonstrate how kind of regulatory pressures are driving displacement.
but also coordinate with the regular. In a compliance level, and we've had five years of this, we're going to strip that back and say, these actions are working, but this is intrusive on the player. I like this kind of research because it kind of asks, pokes those questions, as in like, are we having these conversations and when are we going to get there?
Charlie Horner (13:00.577)
Hm. Yeah, really, really important to build that evidence base up in there. There's several questions that that come off the back of this. okay, Ted Ted will take a very short break and we'll come back and we'll continue our debate.
Charlie Horner (13:15.787)
Welcome back to iGaming Daily. one of one of the key drivers, it seems, of players being being driven towards the the black market is the ease of the sign-up process. W and I guess that's relevant because of the introduction of financial risk assessments coming into play. do Ted, OC, do you do you view that as a as a real motivation for users who are who are engaging with with these illegal sites? Is do you think it is that?
Ease of Synop.
Ted Orme-Claye (13:48.993)
Yeah, I think that's probably quite an undeniable reason people will set up accounts with them. Lack of checks. can just log in and get yourself gambling pretty easily. think that's quite open and shut. I think another problem with it is that a lot of people just don't know...
There's so many companies out there, both regulated and unregulated, and a lot of these companies, a lot of the unlicensed companies, as we've discussed before, they're very good at presenting themselves as regulated, know, because it doesn't take much to present yourself as, just grab a couple of logos of gambling commission, Gamcare or whatever, chuck it at the bottom of your site and you appear regulated. So I think there's that as well, that people don't always know who they're setting up an account with. They also have
some pretty crazy bonuses, a lot of them when you go and look through it, know, some sign up offers that you would never find in the regulated industry because of, well, the regulation and the industry's own self-imposed standards. So yeah, I think, know, as always, there's a couple of different factors at play, but the ease of setting up an account will easily be one of them, yeah.
Charlie Horner (15:09.303)
T you wanted to add there.
Ted Menmuir (15:12.777)
Yeah, I think that it can be kind of viewed as a plausible attraction, but I'd...
You know, be careful to say that it is kind of.
what a major factor in the being and end all of why people choose to sign up with an illegal gambling operator. And also I think it's back to kind of the individual's choice and you know, experience of gambling or, you know, personal terms, why many people would want to kind of bypass high kind of identity checks. And again, I keep on kind of going back to the
conflicts we've had with kind of affordability coming in and what does that mean onto the customer and is it a solution where we think there's just one process is going to fix everything. It's going to be an interesting time in UK Gambling and I think this is a dynamic that we have to see how it plays out.
Charlie Horner (16:13.901)
Yeah, I think I think that that ease of the sign up process is it's an interesting point, but also there's there is a balance to be had, isn't there? In terms of I I can imagine that ha not having a KYC process is quite frictionless and that that might be s quite appealing for a certain level of player. Does that mean that KYC should be scrapped? Probably not, because it's quite important to be able to, you know, keep an eye on who who is in your ecosystem, are they self excluded, etcetera, etcetera, etcetera?
Ted Menmuir (16:22.487)
Yeah.
Ted Menmuir (16:27.925)
No.
Charlie Horner (16:44.641)
So it yeah, it it is a it is a a fine balance, particularly in a market like the UK, which which is, you know, a very mature market, one of Europe's most mature. So Ted do you think that the I the identification of illegal and unlicensed gambling i i you know, that that is a a an an essential move as as we I you know, tackle this problem.
Ted Menmuir (17:07.755)
On reflection, I wanted or I really felt that it would be great if we had research about this because think Ted and I, we kind of write for the position of we...
we are kind of aware of the compliance framework attached to UK gambling, but at a consumer level, is that necessarily true? And I say that as someone who, in other parts of life...
when your bank or your mortgage provider gives you information and asks you to go through these tests, right? You're not kind of hesitant, but if it was for a gambling company, you would be. And I just think that maybe, and this is, know, on...
from my behalf, is that maybe we've been kind of too casual about kind of that process there. I really can't tell on this. I'd love to hear like a 10th view. Is it just everyone knows the brands, everyone knows where they're playing, or is that just another assumption from us?
Ted Orme-Claye (18:16.184)
Yeah, is a tough one. It's a bit like what you said earlier Ted, it is just something that requires more and more research and particularly more research into the customer side of things. This data, the trouble is that this data comes from quite a small sample as well. It's not a huge amount of people is it? So I think it's a good starting point, but it needs to be expanded on. Perhaps some wider monitoring might be needed and then yeah, more research into customer motivations.
Ted Menmuir (18:30.305)
Mm-hmm.
Ted Orme-Claye (18:43.448)
The trouble with surveys, I guess, is always that people can just lie on surveys. They're not always accurate. Take a look at opinion polling around elections and But it's a good start. needs to be more understanding of the different nuances there, the different motivations. And yeah, ultimately, it comes down to what you asked earlier, Charlie.
Ted Menmuir (18:53.581)
You got it.
Ted Orme-Claye (19:08.632)
Is it important to address this? Yes, obviously. It's important for the regulated industry. It's important for the authorities overseeing it. But also I do think another question that's come up to me after looking at this data was if we've got so many people with a PGSI score of eight or more who are gambling with both unlicensed and licensed platforms, we know why they'll be gambling with the unlicensed platforms because of just finding wherever they can to gamble because of the lack
KYC, maybe because of promotions, but why are they still gambling on the license platforms? Why has that not been addressed and why have they not been, why has monitoring not detected them and why have they not been referred for treatment? I do think that's another big question there that needs to be asked regarding them gambling with the license companies, particularly at a time when we've seen so much lobbying and about taxation and regulation and so on. It doesn't really help the industry's case.
Ted Menmuir (19:38.477)
Mm-hmm.
Charlie Horner (20:05.547)
Hmm. Yeah, we talk about external factors and politicians trying to help the industry out. Maybe the industry needs to help its out help itself out sometimes and it's yeah not not always not always doing so. okay let's bring things towards a a little bit of a close now. I guess this sets a good foundation, right? This is this is a great starting point for building out an evidence base in terms of what is the black market, what does it look like, how do people interact with it? But
It is just a starting point. It is only, you know, three three and a half thousand transactions across a hundred and a hundred and eighty or so individuals. Where do we go next? Where where do you think research and insights on illegal gambling should move towards in the next few years? particularly as we might be heading towards a, you know, a reopening of any sort of gambling act review. Ted what do you think?
Ted Menmuir (20:55.041)
Go.
Ted Menmuir (20:58.829)
For me, in just analyzing this research, the biggest gap is we have to move towards motivation, like Ted said, but discovery, spending, and what are kind of the actual kind of harm liabilities because...
There is a point of fallout when you play with legal gambling operators and when does, you know, what are their tactics? How do they operate differently and how do they view a vulnerable customer to, you know, to take to the cleaners? Just put it that simply. And this
Research is good. think, you know, banking data is important because it shows us the payment and transaction volume. That's fine. But again, I think we just return to that theme that we've always said when we talked about the black market. We're very much in phase one. Research is so important now, but it's also understanding that we can't make assumptions. Ted?
Ted Orme-Claye (22:04.713)
Yeah, yeah, the one about like say about assumptions is clearly a big one. We mentioned motivators motivating factors
you need to understand that to get an
Ted Orme-Claye (22:21.59)
So to help those people find treatment. I think that's really the big, another big one here is we've always needed research into like problem gambling education, treatment, prevention, and so on. But I think that really needs to move in lockstep with research into the black market and identifying those motivations as to why problem gamblers are going to it. Because ultimately, you know, we can, I talked earlier about payment blocking and things like that. That's a big way of cutting off this unregulated market source.
If you just prevent someone who's a problem gambler from going to the black market, you're still not treating their underlying problem, you? And you need to have that work. This all needs to link up. Like if someone's an alcoholic and we just say, well, we're just going to find a way to stop them paying at the off-licenser in the pub, they're still going to find somewhere to get a drink if that alcoholism is not treated. The same principle applies for problem gambling as it does for any sort of behavioral problem that someone's having, any sort of addiction.
Ted Menmuir (22:59.563)
Yeah.
Ted Menmuir (23:18.189)
Mm-hmm.
Ted Orme-Claye (23:20.568)
these different dots all need to be lined up.
Charlie Horner (23:24.843)
Yeah, that's that's certainly the case and that rings true for those individuals in that sort of at risk scores of of eight or more on the PGSI. I think another thing is that, you know, there there are other people within this research who are not on that scale or are much lower down on that scale and there's still push factors towards them going to the black market.
Building out that evidence base should also be looked at through a lens of how do we stop those push factors and turn those into a pull factor into the regulated sector. How can we make it so that they want to go to the regulated sector and not the not the unlicensed sector? plenty of takeaways then. and I'm sure as as this evidence basis continue to be built out, we'll we'll continue to report on it and talk about it on the podcast. But for now, Ted, Ted, thanks ever so much for joining me today. Thanks to Optimove for supporting the show.
And to our listeners, thanks for tuning in to today's episode of iGaming Daily and come back tomorrow to keep up to date with all the latest global gambling news.