Gambling Commission Study Links Illegal Sites to Problem Gambling

The Gambling Commission has published a transactions study, and it puts hard numbers behind a claim the UK betting industry has made for years: illegal operators and gambling harm travel together. Among people who transacted with known illegal sites, 45% recorded a Problem Gambling Severity Index score of eight or higher. For those who dealt only with licensed companies, the figure was 6%.

The middle band tells a similar story. Another 16% of illegal-site users scored between three and seven on the PGSI, against 8% of legal-site users. The Commission's working explanation? Some of these customers are self-excluded gamblers who have found non-Gamstop casinos and betting sites, and they're using them to get around an exclusion that applies across the regulated market.

The sample is small. The regulator doesn't pretend otherwise. Transactions from 179 individuals were examined, with PGSI scores available for 146 of them. Most were male, average age 44. None of this can be projected onto the adult gambling population as a whole. It is an indicator, not a census.

Dan Waugh, a partner at advisory firm Regulus Partners, treated the finding as consistent with what the wider research literature already shows. The results reinforce concerns about growth in unlicensed gambling, he said, while acknowledging the study's limited scale.

One pattern in the data deserves more attention than the headline split. Customers who gamble with unlicensed firms tend to stay. In the first month after first engaging with such a platform, they averaged 4.9 transactions. That fell to 1.8 in month two, 1.4 in month three, ticked back up to 1.9 in month four, then dropped to 1.2 and 1.5 in months five and six. Overall volumes still lean heavily toward the licensed sector. But once a player crosses over, the return visits don't stop.

For the government, the timing lands awkwardly. The study appeared in the same week as the Budget, which raised Machine Games Duty to 25% on top of an earlier increase in online gaming tax. Licensed operators are also absorbing Financial Vulnerability Checks and Financial Risk Assessments. Industry lobbying against the MGD increase leaned on employment arguments rather than the black market, a sensible read of the political mood.

Flutter UKI, which runs Paddy Power, Betfair and Sky Bet, said the figures show why the government and the regulator must tackle the illegal and unlicensed market. There is a complication for that argument, though. The National Lottery is excluded from the 6% figure, something bookmakers and casinos have long complained about given their view that the Lottery should meet the same standards they do.

Responsibility, the study suggests, also spreads toward the licensed sector. Some 91% of people who transacted with illegal firms were gambling with legal operators at the same time. The Commission described "substantial overlap between the two". If illegal-site play is a marker of harm, as the PGSI numbers suggest, then a sizeable group of at-risk customers is still active inside the regulated market. That is where the next round of compliance attention is likely to fall.