Gambling Commission uncertain of size of unlicensed gambling market in Britain
“Robust and reliable data is limited,” the gambling regulator admits
UK.- In the last of a series of four reports on illegal gambling in Britain, the Gambling Commission has recognised that it does not have a clear picture of the size of the unlicensed market. The regulator said that current monitoring and research methods can provide only limited insight into online gambling that takes place outside of the regulated sector.
Director of Research and Statistics Ben Haden said the regulator’s data on consumer engagement with illegal websites provides useful insight into trends but comes with caveats and uncertainty.
“Measuring the size of the illegal gambling market is difficult,” he writes .“That’s not an excuse. It is the reality of attempting to objectively measure an activity that is largely hidden.
“Robust and reliable data is limited, and assumptions must be made to fill the gaps. The same challenge is experienced by Government Departments responsible for estimating the financial impact of other areas of criminal activity – for example the tax gap associated with illegal tobacco”.
Haden said that the regulator, as a public body, had a responsibility for generating reliable and credible statistics and for communicating uncertainty associated with its research where necessary. The biggest area of uncertainty is the value of the unregulated market.
The challenge of calculating the value of a hidden market
“The central challenge to estimating the size of the illegal market is the number of additional assumptions that must be made to convert estimates of levels of engagement into estimates of expenditure. The effect of this is that margins for error become compounded and exaggerated – leading to a situation where we do not have sufficient confidence that results will offer meaningful insight.
However, he said the regulator believes that continuing work to measure and understand the market is worth pursuing and would help determine if its work is having an impact. To do that, it has clarified the areas that need more focus.
“By breaking down the challenge into its constituent parts, it is possible to see a pathway to making an estimate that is fit for purpose, Haden said. “Getting there will also need input from operators – data on the legal market will help us strengthen assumptions and update our evidence base. We are looking forward to further conversations to clarify what we need and how operators can help.
“While the exercise of trying to understand the macro-metric of the size of the illegal market is important, the generation of trend data – and insight into specific websites to target disruption activity, is arguably even more vital. We are pleased we are now able to better understand these trends and supply key operational data to our Enforcement Team.”
He recalled that previous reports have found that consumer motivation for using illegal gambling websites and other illegal gambling opportunities are varied. He also noted that players who use illegal web sites don’t always realise they are doing so.
He also argued that not all expenditure by British consumers in the illegal market should be seen through the lens of a ‘loss’ to the legal market. “It appears that many consumers are self-excluded, and therefore unable to gamble in the regulated market,” he noted. “The risk of harm to these consumers is significant, but this is not a legitimate revenue stream for the legal market which has been deprived from responsible gambling operators.”
Consumers also use the illegal market because they have had their gambling opportunities restricted for commercial reasons in the legal market, he added.
No evidence of sustained growth in illegal gambling
Haden recognised that the Gambling Commission has not collected data for all illegal gambling opportunities, but he stressed that the regulator has not seen evidence of sustained growth in engagement with illegal gambling websites where data has been collected.
“This doesn’t mean we don’t see a serious problem that needs addressing, but it does call into question the realism of some of the claims made about persistent and uncontrolled growth in engagement with this market,“ he said.
He added that the Gambling Commission continues to develop tools and tactics to take risk-based disruption action against illegal gambling. He also claimed that international and cross-industry collaboration was making it difficult for illegal gambling to operate at scale in Great Britain.
