Gambling Commission study: black market complements licensed gambling in UK

The Gambling Commission published on 28 October a study showing the black market complements licensed activity in the United Kingdom: 91% of 122 repeat payers to illegal sites also continued to gamble with licensed operators. The analysis uses open banking transactions from July 2018 to July 2026 and covers 157.2 million movements.

Methodology and dataset scope

The sample comes from YouGov and collects open banking transactions from 38,000 consenting panelists between July 2018 and July 2026. Of 157.2 million transactions, 4.8 million were identified as payments to non-lottery licensed operators using a gambling identification algorithm developed by Yaspa.

Detecting payments to illegal operators was more complex. The study attempted to match illegal brand names to transaction descriptions without clear results; the Commission noted this may indicate those operators rarely show their name to payment providers. By matching bank statement descriptions to merchant names linked to suspected operators, the exercise ultimately identified 3,426 transactions from 179 people with an average age of 44 years.

Overlap between illegal and licensed gambling

Of the 179 people, 122 recorded at least two detected payments to illegal services; within that group, 91% also used licensed operators. The group's activity with licensed operators did not show a substantial drop after the first illegal transaction. There were 28.8 licensed transactions per person per month in the six months before the first illegal payment and 23.6 in the six months after.

Illegal payments peaked at 4.9 in the first month after detection and then stabilised between 1.2 and 1.9 per month. Illegal transactions also occurred in clusters, often close in time to licensed bets. The researcher, postdoctoral Data Scientist Steven Murphy, noted on the blog that these findings call into question the idea that illegal gambling is a direct substitute for regulated gambling.

Harm indicators and sample limits

Of the 179 people, PGSI data were available for 146. Of those, 45% scored 8 or more, the threshold for problem gambling. By contrast, among 12,543 non-lottery licensed players in the sample, only 6% reached that threshold.

Other PGSI figures in the sample: 17% of illegal users scored between 3 and 7, versus 9% among licensed players; 26% of illegal users scored 0, compared with 68% on the licensed side. The Commission emphasises that the panel is not nationally representative, so these percentages describe only the study sample.

Credit cards, banned for licensed gambling since April 2020, accounted for only 4% of the identified illegal transactions.

Tax context and industry reactions

The report was published the same day Chancellor John Healey presented his first Budget. The Government raised Machine Games Duty from 20% to 25% on high-stakes machines, effective April 2027. This follows measures from the Autumn Budget 2025 and the rise of Remote Gaming Duty from 21% to 40% in April 2026. In addition, a new remote betting rate of 25% is scheduled for April 2027, excluding UK horse racing.

Operators have linked these tax rises to growth in the illegal market. Flutter, which has proposed up to 1,400 redundancies in the UK and Ireland, said through its UK & Ireland division it is concerned how the rates are feeding the unlicensed market. Entain quantified the machine increase as £25m per year before mitigation and Stella David, CEO of Entain, said:

“The previous gambling tax increases announced in November last year have already had detrimental consequences across the industry, with the effects being felt by employees, communities as well as customers. These additional tax changes will further compound that damage and push more people into the growing illegal market.”

The Commission warns that its design cannot prove causation between spending at illegal operators and harm, and that cryptocurrency deposits are missing because the study covers only fiat payments to banks that support open banking. The body describes the work as a proof of concept and calls for broader use of financial transaction data with banks and payment providers. Operators should watch April 2027, when new remote betting and machine rates will coincide; repeating the study with data from that period would offer a direct read on whether customers maintain regulated activity while paying outside.

For more details on regulation and regulatory responses, see the Commission's work on regulatory work. For industry reactions and operational effects, consult analysis in our B2B section.