A report commissioned by Euromat, and created by Regulus Partners and Helios, reveals that Europe’s black market is projected to grow at a compound annual rate of 18% from 2019 through 2026, potentially reaching a value of €13 billion by year’s end.
This comprehensive assessment covers black market operations in 28 European jurisdictions, including key markets like the UK, Netherlands, and Germany. Within this mature ecosystem, an estimated 25 operators are responsible for approximately 64% of black market traffic, driven largely by the rapid rise of cryptocurrencies and the effective branding strategies employed by these firms through marketing and sponsorships.
The report points out that certain brands are specifically targeting banned products within their jurisdictions. For example, iGaming remains prohibited for licensed operators in France, contributing to black market growth.
According to the authors of the report, “The largest black market operators have scaled to create recognisable brands with traffic that can compare to domestically licensed operators.” The report indicates that the leading group of sites, under a common ownership, captures 12% of this traffic, while the single largest brand accounts for 10%.
In addition to providing cryptocurrency payment options, many black market operators are licensed in low-regulation offshore jurisdictions, making local enforcement of laws against these companies challenging. Smaller black market sites tend to depend heavily on affiliate marketing to attract traffic.
A significant factor fueling the black market’s expansion is the increasingly stringent regulations imposed by governing bodies within the licensed sector. The report notes that 46% of the analyzed markets enforce strict advertising limits, which include countries like Belgium, Germany, Italy, and Spain.
Also highlighted are the impacts of taxation and the prohibition of certain products, which affect 29% and 14% of the markets surveyed, respectively. Monopolistic structures in five markets further restrict player options, driving consumers towards illegal alternatives.
As players often engage across various betting categories, limiting access to particular verticals can lead them to seek out black market sites that provide broader choices. “If a customer finds black market sites that have all their preferred betting and gaming options, convenience dictates they will transfer a broad range of their expenditure there,” the report emphasizes.
This trend is particularly notable in competitive verticals like online slots, where players may gravitate towards illegal sites if they encounter unfavorable return-to-player rates or restricted bonuses.
Additionally, Regulus highlights that the top 1% of active customers contribute nearly 50% of black market revenue in Europe, reflecting a wider trend within the legal gambling sector: a small proportion of consumers drives a substantial share of expenditures.
Examining the UK in particular, the report notes a sharp decline in channelization rates, especially following the implementation of stricter affordability checks and an increase in the remote gaming duty from 21% to 40% in April. This change is expected to push the UK black market towards a valuation of nearly €1 billion, as consumers may turn to unlicensed options to find unrestricted bonuses.
Previous surveys have echoed these findings; for instance, YouGov reported that two-thirds of bettors indicated this tax hike would push them toward unlicensed gambling operators.
Historically, the UK has enjoyed a high channelization rate due to its mature market and competitive landscape. Currently, up to 1,491 licensed sites offer enough choices for players.
To compile the report, various methodologies were applied to estimate the scale of the black market, including web traffic analysis, digital marketing data, and regulations in the 28 surveyed markets. Helios conducted a thorough analysis of black market websites that were active in marketing across these jurisdictions from March to May, corroborating findings with SimilarWeb traffic data, which showed a significantly higher number of illegal sites compared to those with local licenses in countries like France, Portugal, and Spain.
