‘The Review of unlicensed online gambling in the UK’ was commissioned by UK cross-sector trade body the Betting and Gaming Council (BGC).
It acts as a follow-up to a 2018-19 PWC study commissioned by Entain (then known as GVC Holdings) and William Hill.
The 2021 report found evidence customers using and spending at offshore sites on the rise. This was in spite of these sites becoming less visible on Google, and with little evidence of growing public awareness of black market brands.
“While unlicensed operators appear to be less visible to unsuspecting UK customers now than they were in 2018-19, there is evidence of growing use and spend of these operators,” the study explained.
PWC added that this must be considered a “meaningful issue” for the industry, as these sites pose a risk to player protection, tax collection and the fights against money laundering and match fixing.
In addition, it said these sites may not treat players fairly or have adequate responsible gambling safeguards.
The report used four metrics to determine the proliferation of unlicensed online gambling.
These were public awareness of unlicensed operators; public usage of unlicensed operators; spend at these operators, and the proportion of unlicensed operators in Google search results.
The first three categories were measured through a survey of 2,363 active British gamblers in November and December 2020, which asked questions about gambling activity in the last 12 months, including 19 major unlicensed brands.
The fourth was measured by examining unique sites within the first 10 pages of Google results. In total, 9,313 sites were examined based on 47 search terms – 24 for betting and 23 for gaming – none of which were specific searches for unlicensed sites.
Awareness of unlicensed sites declined slightly, from 47% to 44%, suggesting that around 4.5m gamblers are aware of at least one unlicensed site. PWC noted, however, that the list of sites changed between the two versions of the study and awareness of the 11 sites that appeared on both years’ lists increased from 35% to 37%.
Players who gambled more across all sites regardless of licence, the study found, were both more likely to be aware of an unlicensed site and more likely to be aware of a large number of such sites. It found that 57% of respondents were aware of at least one; 35% at least two, and 14% at least five.
PWC added that players that had lived abroad were no more aware of unlicensed sites. This suggested awareness of these sites was not driven by players who had lived in countries where the sites listed may have held a licence.
However, both usage and spend increased, according to the survey. The amount of individuals that used an unlicensed site more than doubled from 2.2% to 4.5%, representing around 460,000 people if extended to the general population. The study added that this was confirmed by web traffic data, which showed an 85% increase in traffic at the 11 sites on both lists from October 2018 to November 2020.
Unlicensed usage increased across every gambling vertical measured, but especially for bingo, where it grew from 0.7% to 2.8%, while poker had both the highest usage and the second-highest growth rate.
Similarly, the amount spent at these sites almost doubled. Consumer spending on offshore sites rose from 1.2% of total stakes sites in the previous survey to 2.3% of spend in 2020. If this was extrapolated across the population of Great Britain, it would represent total spend of £2.8bn, double the estimated £1.4bn wagered via offshore sites in the 2018 edition.
The estimate of unregulated sites making up 2.3% of igaming spend was roughly in line with a European Commission survey from 2017. That study found 2% of stakes were placed offshore.
The EC study only focused on sports betting but included unlicensed operators across land-based and online.
However, the number of unlicensed sites in Google’s results declined sharply, from 12% to 5% in 2020. PWC noted the decline was more significant across the first two pages of search results.
It added that at the majority of these sites, it was not possible to create an account with a UK IP address and account details.
However, PWC said that one reason for the decline was that the overall number of unique operators in the results declined by 41.9%. This was due to an algorithm change in favour of higher-traffic sites, rather than de-emphasising unlicensed sites.
Unlicensed sites were also more prevalent in searches for gaming terms than for betting.
Factors in choosing an operator
The survey asked players the most important factors in choosing an operator. Across all players, trust in the operator was most important, followed by easy options for withdrawing funds and competitive odds.
However, among players who used unlicensed sites, ability to bet large amounts, offering bets or games that others don’t, and ability to place live bets were all popular responses.
In addition, the survey found that players were likely to say that unlicensed operators had easier account registration processes, a wider range of offerings, easier withdrawals and a better reputation than licensed sites.
The survey also asked if certain changes could lead to players looking for new operators. From these responses, PWC concluded that major changes to gambling laws or regulations such as possible results from the ongoing Gambling Act Review may have a significant impact on unlicensed play.
It said that changes requiring more information, such as affordability checks, could lead to more than 30% of gamblers looking for new operators, while monthly stake limits may lead to 18% moving elsewhere. Maximum slot stakes, it claimed, could lead to 27% of customers migrating offshore.
Of those who said they would look for a new operator, 36.3% said they would use online searches, and 20.1% online ads as the primary method of finding a site.
Data in perspective
PWC added its estimates of online gambling usage and spend are likely to be lower than the real figures, as it couldn’t account for the “long tail” of small but numerous unlicensed sites that were not mentioned in the list. In addition, it said players may not recall or may opt not to disclose their activity and spend.
Furthermore, it looked to focus on sites that may be accessed by an “unsuspecting” customer, and therefore didn’t fully account for customers searching specifically for unlicensed sites or getting around restrictions to some of these sites through methods such as VPNs.
It added that, compared to the Gambling Commission’s data, its survey appeared to underrepresent high-spending customers.
PWC also compared its British figures to other European countries. This suggested that unlicensed online GGR in Britain is much lower than most other countries, but said this was mostly due to lower tax rates and fewer “administrative burdens” or product restrictions.
In comparison, it said, countries such as Norway and France – where legal products are limited – tend to have the highest levels of offshore GGR.
Countries with high levels of tax – such as France – or with difficult administrative obligations, such as Spain, tend to also see much more offshore spend than the UK, it said, but less than France or Norway.
The 19 brands in the survey were selected from those that ranked highly on Google for popular keywords; those with highly ranked mobile apps, and those with high levels of traffic. The 19 also reflected those most commonly promoted by popular affiliates; those that sponsored major football clubs, and lists of major unlicensed sites produced by William Hill and the Betting and Gaming Council.
This produced a list of around 200 unlicensed sites that was filtered down to the 19 highest-traffic sites that did not restrict UK-based IP addresses.
PWC added that it included two “dummy” brands which did not exist to ensure respondents were giving accurate answers.
The study has already prompted the BGC, William Hill and Flutter Entertainment to warn the Department of Culture, Media and Sport (DCMS) to be cognisant of the black market as it undertakes the review of the Gambling Act.