The black market dilemma: When safer gambling drives players away
As gambling regulators around the world push for tougher consumer protections, a dilemma persists: how to safeguard players without driving them toward unlicensed, unregulated operators? Striking the right balance between strict oversight and a competitive legal market is proving increasingly difficult.
The risk of overregulation
Over the past years, many jurisdictions, such as the Netherlands, Germany, and the UK, have tightened gambling rules, introducing deposit limits, advertising bans, affordability checks, or mandatory breaks.
These measures, designed to protect players, have sometimes had an unexpected side effect: they’ve also made licensed platforms less attractive.
When regulation becomes too burdensome, many don’t stop gambling—they just look elsewhere.
Mr Kevin O’Neill, General Manager at the in Malta, explained to SiGMA News: “Players need to be educated about all the risks associated with the unregulated market. The attraction of fewer restrictions and better payouts is overshadowed by risks such as manipulated games or odds and lack of legal recourse for disputes—on top of a much greater exposure to gambling harm due to the lack of responsible gaming tools.“
The lure of the black market
In October 2024, the Netherlands introduced affordability checks and monthly caps. Following that decision, in the final quarter of the year, online gambling revenue dropped 12.3 per cent. To some, the decline suggests legal operators relied too heavily on high-spending problem gamblers. Others see it as evidence of players migrating to offshore gambling sites to dodge new rules.
Offshore platforms, often polished and promotion-heavy, attract users with fewer restrictions, higher payouts, and anonymity. Because they fall outside national oversight, they expose players to greater risks: fraud, addiction, and no legal recourse in disputes.
Black market operators are not subject to taxes and, overall, do not have to deal with the regulations that pressure legal operators. Unfair competition, however, extends beyond this. When advertising restrictions are in place, licensed operators argue that they struggle to communicate the safeguards they offer to players and to promote their brand, making it harder for players to know which platforms they can trust.
Educating players
A recent survey from the Swedish gambling regulator, Spelinspektionen, seems to support this concern. According to the study, 72% of respondents admitted that they were unable to tell whether a platform was licensed or not.
Mr O’Neill explained that “while licensed operators are held to high standards of transparency, fairness, and player protection, black market platforms often operate under the radar, making it difficult for players to differentiate between legal and illegal options. Regulators need to prioritise consumer education, making it clearer to players how to identify trustworthy platforms and the risks involved in unregulated gambling. This could help mitigate the attraction of the black market and ensure that safer, legal alternatives are more accessible and visible to consumers.“
A smarter way forward
Advocates for stricter controls insist that concerns over black market growth should not stall protections. The solution, however, may not lie in blanket restrictions but in smarter regulation. More operators are now using AI to flag risky behaviour and intervene early, without disturbing casual users.
Countries like Sweden are also embracing “channelisation targets,” aiming to keep most gambling within licensed ecosystems. Sweden’s goal is 90 per cent channelisation, and it tracks its progress with quarterly reports.
For regulators, the goal shouldn’t be a choice between safety and profitability. Instead, they should focus on building regulatory frameworks that encourage both. That means partnering with responsible operators, focusing enforcement on bad actors, and making licensed platforms both safe and appealing.
“By encouraging innovation in regulatory frameworks, such as integrating AI-driven tools for early intervention and setting realistic channelisation targets, we can create a system where safety and profitability aren’t mutually exclusive. Only then can we hope for a sustainable future where legal operators thrive, players are fully protected, and the black market loses its appeal,” concluded O’Neill.
