Industry insiders with estimates on the online gambling black market in Europe

Illegal online gambling is growing across Europe - despite strict regulation. Insiders warn that tough measures are of little help - in some cases they can even strengthen the black market. It would be more effective to understand the players. The German model is also part of the debate.

Clearly positive news on the development of the gambling black market is rather rare. Illegal offers are keeping the industry, authorities and politicians busy throughout Europe.

Insiders from various countries have recently commented on this in the international trade press and made it clear that the problem is growing. Many measures that are actually intended to exclude unauthorized operators would hardly achieve anything - and official figures on black market use should be treated with caution. Strict or "draconian" regulation could even provide the "illegals" with more customers.

It would be more effective to understand the players better and beat the black market at its own game. The German model was also mentioned several times. Speaking of which, the GGL recently called for stricter criminal law, which would also focus more on users of illegal online gambling.

Illusion of control: user numbers and channelling rates can be deceptive

What are the real dimensions of the black market? This fundamentally simple question is actually almost impossible to answer.

"How can you calculate something that is not recorded anywhere? It's a bit like quantifying the size of the black economy. It's a very difficult task," explains Richard Williams, gambling lawyer and partner at Keystone Law.

Nevertheless, authorities, industry associations and politicians are trying in various ways to generate reliable figures. The British Betting and Gaming Council (BGC), for example, estimated in September 2024 that a whopping £2.7 billion worth of bets are placed on the English black market every year. And that is still a conservative figure, which could well be significantly higher in real terms. Incidentally, the live game developer Evolution is under massive pressure in England due to black market relationships.

In Germany, the official estimate for the use of illegal online offerings is around 4 percent. This contrasts with the figure from the German Online Casino Association (DOCV), whose President Dirk Quermann spoke of 20 to 40 percent at the ICE 2025 trade fair.

In addition to the specific black market user figures, the focus is on the so-called channelling rate. This describes how many players opt for legal offers. In markets such as Sweden, the Netherlands and Denmark in particular, this figure is repeatedly used as a particularly strong criterion for success. With a usage rate of around 90 percent for legal gambling sites, the Danes are considered a prime example of effective regulation in Europe.

But here too, it is worth taking a closer look: In Sweden, for example, there are three different channelization rates - depending on who is measuring. The regulatory authority Spelinspektionen quotes 86 percent using data from H2 Gambling Capital and player surveys. The race betting monopoly ATG speaks of 70 to 82 percent in its Q3-2024 evaluation - measured by user flows to illegal sites. The industry association BOS, on the other hand, estimates 77 percent.

"In Sweden, where I live and work, the channeling debate is the mother of all discussions," says Gustaf Hoffstedt, Secretary General of the Swedish gambling association BOS. "No other assessment has so much influence on the government or the authorities and ultimately on the discussion about how markets should be regulated."

For Hoffstedt, it is clear that the measurement methods need to be improved - a concern shared by BGC expert Grainne Hurst:

"I expect that standardized methods will prevail as this work develops. But it will always be difficult to determine the extent of the black market - because of the tactics that operators use."

Uniform standards could prevent channeling rates from being deliberately embellished.

"Authorities tend to estimate channelling higher than the industry itself - to paint a healthy, thriving legal market picture," says Hoffstedt.

Why the hunt for illegal providers is like tilting at windmills

On paper, the European authorities have some very strong measures in place against illegal gambling providers. However, the opinions of international industry experts differ as to whether these can actually have the desired effect.

The effectiveness of geo-blocking in particular is often overestimated. This is because unregulated providers have long had various solutions for such restrictions up their sleeves. One popular strategy is to set up so-called mirror websites. As soon as a site is blocked, an almost identical copy with a new URL goes online.

The verdict on IP blocking is particularly sobering, as the Federal Administrative Court in Germany has just confirmed that it cannot be enforced. IP blocking is permitted in the Netherlands. However, according to the local supervisory authority KSA, it is hardly practicable. Its chairman, Michel Groothuizen, explained that it can take up to a year before an individual site is actually blocked - as every block has to be reviewed by the courts.

"I'm envious of our colleagues at the authority for combating online terrorism and child pornography. In some cases, such content can be removed within an hour," says Groothuizen. Gambling, on the other hand, is much lower on the government's list of priorities.

Google is now also intervening. As we reported, the search engine giant has banned illegal gambling providers from advertising on its network in Germany since September 2024. The Joint Gambling Authority of the federal states (GGL) is very pleased with the development and reports success - but not everyone shares this optimism.

Simon Priglinger-Simader, Vice President of the German Online Casino Association (DOCV), remains skeptical: "This is great progress in Germany and definitely a best-practice example for other markets," he says. "But we're still not sure about the actual effect."

The sharpest sword is payment blocking, i.e. the targeted prevention of payment flows. If you can't receive money, you can't offer games of chance - so simple, so effective.

According to Simon Priglinger-Simader, this is already having a clear effect in Germany: "We are hearing from the GGL that they are seeing a real impact from payment blocking."

In fact, the authority highlighted significant progress in payment blocking in its overall positive annual review for 2024.

Consensus: the legal online gambling market must become more attractive in order to curb illegal providers

Penalties, bans, prohibitions - all of these may be necessary. But repressive measures alone will never stop the black market: Many industry experts now agree on this.

"Enforcement alone will never prevent illegal gambling," warns Hurst. The regulated market must remain the most attractive place to gamble and bet. "Draconian measures do not prevent gambling - they rather drive the illegal offer further."

According to the insiders, the consequences can already be seen in several European countries. In the Netherlands, for example, the gambling tax is set to rise by 37.8 percent by 2026 - a burden that is causing many providers to pull out. Some big players have already left the market. Industry representatives assume that others will follow.

A withdrawal with far-reaching consequences: Because fewer providers mean less choice - and a market that could become increasingly less attractive for players.

Gustaf Hoffstedt sees a structural problem: according to him, many European countries rely too heavily on repression. Neal Menashe, CEO of the listed Super Group, expressly agrees. In his opinion, many current regulatory approaches "resemble the punishment of civilians for the actions of criminals".

Concerns are also growing louder in the UK - for example about the planned liquidity checks prior to registration on gambling sites ("affordability checks") and betting limits for slots.

Hurst comments: "It is counterproductive for a safe gaming environment if regulations make the legal market unattractive. We see it very clearly: nobody wants to disclose sensitive financial data. In such cases, people either stop playing altogether - or they switch to the black market."

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Central text sources: https://igamingbusiness.com/offshore-gaming/europes-illegal-gambling-market-whats-the-solution/