Unlicensed gambling – Part 3: The warning, the webinar and the method(ology) to the madness
In this Part 3 of our recent blogs on unlicensed gambling, we discuss recent statements made by the Gambling Commission regarding the steps that it is taking to identify, quantify and disrupt illegal online gambling in Great Britain (“GB”).
If you would like to read more on this subject please see: Unlicensed gambling – Part 1: Growing threat or exaggerated myth? and Unlicensed gambling – Part 2: Is the Gambling Commission winning the “whack-a-mole” game?
The Warning
On 20 January 2025, the Gambling Commission posted a warning notice to the gambling industry on its website in which it explained it had become aware of casino games supplied by licensed operators appearing on unlicensed websites available to GB consumers illegally, and called on its B2B licensees to help it to tackle the illegal, unlicensed market.
The Gambling Commission noted that in some instances, third party resellers (who are also commonly known in the industry as aggregators) are distributing games supplied by its licensees to the illegal market, often in breach of contractual obligations. In the Gambling Commission’s view, licensees may have been negligent in permitting this and warned that that this practice might place a Gambling Commission issued operating licence at risk.
To mitigate this regulatory risk, the Gambling Commission advised its B2B licensees:
- to actively monitor their business relationships to ensure their partners are not participating in offering illegal gambling facilities to the GB market;
- to terminate relationships where non-compliance has occurred; and
- to actively engage with the Gambling Commission where such activities are identified, setting out the preventative measures adopted to ensure such activity ceases immediately, making clear that:
“Actively notifying the Commission and setting out a clear plan to mitigate the issue at pace is a minimum requirement.”
The Webinar
The previous week, Harris Hagan’s Managing Partner, John Hagan hosted the International Association of Gaming Advisors (IAGA) Best Practices Webinar on 15 January 2025, titled “Setting the UK Gambling Agenda for 2025: a less political year?”. During the webinar, Andrew Rhodes (Chief Executive of the Gambling Commission) and Grainne Hurst (Chief Executive of the Betting & Gaming Council (“BGC”)) shared their thoughts on various topics, including unlicensed gambling.
Rhodes confirmed that the Gambling Commission has invested in disrupting the illegal, online gambling market during recent years, with some success. However:
“Everyone should accept there has always been an illegal market present and much as different people want to debate the size and value of it, the reality is we need to understand the flow into it and why that happens, as well as preventing its ability to operate at scale.”
Rhodes emphasised that “legitimate” licensees are expected to undertake their own due-diligence on their suppliers and partners to ensure they are not engaged in unlicensed activity facing into GB – expressing concern at why anyone in the licensed industry would want to be in business with a company that is supporting illegal competition.
Rhodes went on to confirm that in 2025, the Gambling Commission will continue to use new capabilities around covert test purchasing and other investigative tools to identify those who are assisting illegal operators, as well as targeting those illegal operators directly – concluding by making clear that where the Gambling Commission feels it is necessary to suspend or revoke the licence of any operator or supplier, they will do.
Meanwhile, Hurst confirmed that disrupting the unlicensed market is a top priority for the BGC, alongside delivering the outstanding elements of the White Paper and making sure that a sensible tax harmonisation is put in place when the new regime is announced later this year. While they are still in the process of formalising next steps, action is being taken following the Gambling Commission’s challenge to the industry last year, and B2B BGC members will soon be required to commit not to provide content to unlicensed operators serving the GB market.
The Method(ology) to the Madness
The recent flurry of warnings by the Gambling Commission regarding unlicensed gambling follow its release last year of a statistics and research paper, Unlicensed gambling – Using data to identify unlicensed operators and estimate the scale of this market – October 2024 (the “Methodology Paper”). The Methodology Paper was a first step for the Gambling Commission in sharing its work in developing its capacity to identify unlicensed operators in GB, in which it explains how it is using an evidence-led approach to disrupt unlicensed gambling.
Focus
Although the Gambling Commission acknowledges in the Methodology Paper that unlicensed gambling can also take place in land-based premises, the paper is focused on the online market ‘where data has the greatest potential to help us make an impact’. The Gambling Commission explains in the Methodology Paper that it has undertaken several stages of work to formulate its approach which include:
- Understanding the motivations for consumers to enter the online unlicensed market, and the channels through which they do so
The Gambling Commission is focusing on specific areas of consumer motivation: people who have experienced gambling harms – especially those who are self-excluded; and consumers looking to avoid identity verification.
- Identifying unlicensed operators and estimating the scale of usage by GB customers
Web traffic data and gambling behaviour data will be used to estimate the gross gambling yield (“GGY”) of the online unlicensed market, although the Gambling Commission concedes that making an accurate estimate will be challenging, as much activity is deliberately obscured by virtual private networks (“VPNs”).
Methodology
The Gambling Commission will use the following methods to identify and measure the scale of the online unlicensed market:
- Google search results to list of search terms
Results to search terms will be monitored on a monthly basis. The search terms will be devised from a combination of industry engagement and consumer research, advice from the Gambling Commission’s intelligence and enforcement teams, and additional desktop research on to identify terms used on affiliate pages such as “not on GAMSTOP” that are used to target particular groups of consumers.
- Identify affiliate pages or articles listing unlicensed sites
The Gambling Commission will identify affiliate sites and/or articles that recommend gambling websites targeting specific consumer groups, for instance, “best UK casinos not on GAMSTOP”, by checking for key words on web pages and identifying the presence of outgoing affiliate links.
- Extract links to unlicensed gambling sites and obtain web traffic data
Unlicensed sites that are linked from affiliate pages and/or articles will be reviewed to determine whether they are blocked to GB customers. Under the current methodology, the Gambling Commission is able to flag sites that are blocked immediately upon opening but not sites that are blocked upon account registration. Web traffic and average visit duration data is obtained for each of the unlicensed sites using Similarweb, which is a digital intelligence platform that allows access to estimated web traffic data.
- Combine web traffic data with research data to estimate spend on the identified sites
To estimate the GGY associated with identified sites, web traffic data will be combined with an estimate of average consumer spending behaviour, the latter of which will be based on data from the Gambling Commission’s Patterns of Play research.
The intended output of the above work will be twofold: (a) a dashboard of unlicensed operators ranked according to current usage by GB consumers, which can be used by enforcement teams to prioritise and target disruption activity; and (b) to allow the Gambling Commission to estimate the likely scale of the unlicensed market for GB consumers.
Limitations
The Gambling Commission acknowledges within the Methodology Paper, that its methodology cannot capture the whole online unlicensed market. For instance, GB traffic from consumers using a VPN.
Other assumptions and limitations include:
- The assumption that gambling behaviour on unlicensed sites is the same as on licensed sites;
- GGY estimates are based on online slots play only, as it is assumed that a significant proportion of unlicensed gambling activity is slots;
- Unlicensed sites are included in the GGY estimate regardless of the average visit duration, including very short average visit durations which could indicate visits where no money is spent or very long durations which could indicate periods of inactivity; and
- Not all consumer motivations are currently included in the core search terms.
Next steps
The Gambling Commission has called on the industry to report suspicious activity to the Gambling Commission’s intelligence team at [email protected] or, alternatively, through the following confidential portal: Tell us something in confidence.
Please get in touch with us if you have any questions regarding unlicensed gambling in GB, your due diligence obligations and how to actively monitor your business relationships, or if you would like assistance reporting a suspicion to, or responding to an information request from, the Gambling Commission.