Can Big Tech and the banks starve Europe’s black market?
Anders Dorph, head of Denmark’s gambing regulator, Spillemyndigheden, does not flatter his own numbers. Ever since Denmark opened its online gambling market in 2012, it has been held up as proof that a well-designed licensing regime can starve the black market. However, at a SiGMA panel on Thursday, Dorph disowned the figure that made the case. “The number we’ve been bragging about for so many years, a 93% channelisation rate, isn’t really true any longer,” he said.
Better measurement is a part of the explanation, he said, but regardless, Denmark certainly is not immune to a drift to the illegal market either. Once H2 Gambling Capital, a consultancy, began counting crypto casinos and affiliate traffic some 18 months ago, its estimate of the share of Danish gambling captured by licensed firms fell to 78%. The regulator’s own web-traffic measure says 82%. Only 6-7% of Danish gamblers use illegal sites, a recent survey by Spillemyndigheden found, “But they are heavy players. We have to wake up and do something serious about it,” Dorph said.
Pressure on Big Tech
Waking up, in his telling, means looking past the operators to the firms that make them visible and get them paid. “You never see an illegal gambling ad on television, but on social media they’re everywhere,” he said. Regulators can remove the ads they find, but that is “too little, too late”. Only the platforms, through their own systems, can filter at scale. Speaking to iGB, Dorph expanded on his view: “It’s really important that we do something about big tech, that we get hold of them, and that we get hold of the payment service providers, and get cooperation going across Europe.”
Dorph said the Danish regulator had entered talks with Meta – they met in May and the regulator is pressing for another meeting. It has also held talks with Google. The stakes are large. “There are social media platforms with maybe 500 million users in Europe who are exposed to huge numbers of ads for illegal gambling sites, and somehow we have to put a stop to that,” he said.
But progress is slow: “I’m well aware we’re not there yet, and it may take more before we get anywhere.” Asked whether Meta and Google were easy to deal with, he replied: “I don’t think I should comment on that.”
Denmark is not alone in taking the fight to Meta. In the Netherlands, VNLOK, the trade body for the country’s licensed online operators, has summoned Meta to court, accusing it of failing to stop illegal operators advertising on Facebook and Instagram, in breach of the EU’s Digital Services Act.
Follow the money
Payments are the second front. For years banks have told regulators that blocking gambling transactions is difficult, expensive and needs delicate software. Dorph reckons even modest success would bite: “If we could block even 10% of the revenue, illegal operators would face a real risk of not getting paid.”
DNS blocking is easily dodged, he admits, “but we can see that activity on those websites goes down.”
The method is obstruction or, as he puts it, “putting as many obstacles in the way of the illegal market as possible.” Not every offender is a knowing one, either. Around one in ten Danish players, he said, does not know whether they are gambling on a legal site or an illegal one.
Feel very alone
The concern affects every jurisdiction in the industry. Jānis Ungurs of Latvia’s State Revenue Service, also speaking in Rome, said that his country blocks around 4,500 web pages, but “the next day a new page appears under a new domain”. H2 reckons a fifth of Latvian online gambling is illegal. “We feel very alone,” he said. Petya Sergeeva Kamenska of Bulgaria’s National Revenue Agency described how self-excluded players keep slipping onto illegal sites through VPNs and proxy servers, and said Bulgaria is moving towards payment blocking with its central bank.
Taking it to Brussels
Pierre Tournier, interim secretary-general of the European Gaming and Betting Association (EGBA), which represents licensed online operators, wants Brussels to act harder. He told iGB that he believes it has “explored all the available legal avenues at EU level”. Its conclusion, Tournier said, is “to pursue the companies and services that are licensed in the EU and that facilitate the business of illegal operators, which are often out of reach and based outside the EU”. That means the platforms hosting illegal gambling content and the payment firms processing its transactions. “We are calling on the EU to get its act together,” he said.
EGBA is lobbying several corners of the European Commission. DG CONNECT, which enforces the Digital Services Act, is the obvious address for complaints about the platforms. Anti-money-laundering rules, Tournier argued, “could be a very powerful tool against the illegal market”. DG GROW, guardian of the single market, could also play a part in pushing member states towards EU-compliant licensing regimes, he said. Meanwhile, EGBA is gathering evidence to show the Commission what is happening on the platforms. There is ongoing work to establish the extent to which illegal operators are exploiting new technologies, including AI.