Eilers & Krejcik Gaming (EKG) has reported the UK online gambling black market could be worth £1.5bn in NGR for CY 2024, as the boutique analyst firm said its sustained rate of growth presented a “big risk”.
The 34-page report – which is triangulated from Gambling Commission data, black market sources and in-house estimates – claimed the UK black market will grow 32% in CY 2024.
The authors estimated the share of UK online net gaming revenue in the black market is 14%, compared to 12% for the Dutch black market and just over 10% for Sweden.
Those figures represent EKG’s bull case estimations for the size of the market in the UK, with a base case putting its size at £1.05bn, or a 12% share of the market.
Bear case modelling also presented by the authors had the black market at just over £600m in NGR.
EKG said online casino was the main driver of the online UK black market, representing between £900m and £1.2bn of NGR, based on estimates.
Sports betting black market NGR was put in a range of between £200m and £300m.
EKG added the potential scale of the UK black market by 2027 could reach £2.4bn, compared with regulated online NGR projected to be £7.1bn for CY 2024.
In comparison to the EKG study, Betting and Gaming Council-commissioned research from Frontier Economics has estimated around £2.7bn is staked on online with black market operators each year.
The Frontier Economics report did not divulge GGR or NGR as part of its own publication.
EKG said the growth of the UK black market, which has accelerated since Covid-19, is defined by three main verticals: traditional offshore companies, private bookmakers on WhatsApp and Telegram, and crypto-centric operators.
The shift of VIP players from the regulated to unregulated sector was highlighted as a key driver of growth, with affordability checks pushing higher-value customers to the black market.
A combination of affiliates, Google Search and social media sites also play a prominent role in attracting customers to the black market, EKG added.
And once customers are on unlicensed sites, they are faced with more generous bonusing than regulated offerings, features such as ‘buy the bonus’ and lower AML and KYC thresholds.
EKG said: “While the black market is not a structural risk in its present form, the rate at which it is growing and the increasing attention it is attracting is a big risk for the UK in the medium- to long-term.
“The biggest issue for the UK sector is the black market absorbing a lot of higher value play. The black market offers far higher deposit limits and bonusing levels multiples higher than seen in the regulated sector.
“Additional factors such as the use of auto-play, buy the bonus features, higher RTPs and cryptocurrency deposits are also incentives to play in the black market, particularly for higher-spending casino players.”
EKG did point out major crypto brands like Stake, BC.Game and Sportsbet.io geo-block the UK market.
The release of the EKG report comes as the Gambling Commission promised to publish its own research next spring into the black market.
However, the regulator said that to provide an “accurate estimate” of the black market’s true size is “very challenging”.
Gambling Commission CEO Andrew Rhodes warned UK-licensed operators last week to ensure their supplier partners are not supporting unlicensed operators targeting the UK market.
If you would like to read the report in full, please visit Eilers & Krejcik Gaming.
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