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How Regulated Gambling & Rises in Restrictions are causing a rise in Unregulated Gambling Markets

Organisations like the UK Gambling Commission are responsible for regulating the gambling market and ensuring the safety of the public. The UK Gambling Commission, in particular, holds the power to grant licences to operators who are deemed to be law-abiding and offering fair games to their customers.

But what if the UK Gambling Commission’s efforts to ensure public safety and filter out criminal activity were in fact doing the exact opposite? Gambling regulators have increasingly stepped up restrictions on online casinos in recent years in an attempt to crack down primarily on problem gambling and addiction. 

While gambling addiction is and will always be a serious issue that every operator should do their part to help curtail, there are serious consequences to imposing restrictions on online betting. Indeed, the issue isn’t so simple that gamblers will suddenly cease problem betting if greater restrictions are adopted. In fact, the reality is much darker. 

The problem the industry faces is one which regulatory bodies such as the UK Gambling Commission are specifically set up to avoid: unregulated gambling markets. The point of ensuring gambling operators are regulated is to certify that they operate within the law. 

But what we are now increasingly seeing is frustrated customers turning away from the highly restricted operators and towards dangerous unregulated gambling markets. The potential for player harm and the emergence of crime within these unregulated markets is rife and must be eradicated.

What Threats do Unregulated Casinos Pose?

So, what exactly is an unregulated casino and what is so troubling about them? Of course, unregulated casinos do not always pose a threat. Often these markets are simply operating in areas where there is an absence of casino regulation or operating in an offshore location. 

However, there are countless threats that come from the darker side of unregulated gambling markets. One of these is unreliable withdrawals. Unregulated operators are infamous for taking a long time to process players’ winnings, with customers often waiting over a month to be able to withdraw their funds.

Some unregulated casinos have proven to be so unreliable that they have closed without ever paying out to their customers at all. With no regulatory body able to audit their accounts and processes, players are setting themselves up for the unknown, often with dire consequences.

Another issue is that unregulated casinos do not require players to identify themselves. Often, they do not need to create an account at all. This, of course, means that no age verification checks take place. Furthermore, the lack of player identity creates an environment susceptible to crimes such as money laundering.

Chip dumping in online poker is one method that is used by criminals to pass on illegally acquired money to others. With an absence of location checks, players in the same room can pretend to play a game of poker and deliberately lose in order to pass money over to each other.

When the money is then withdrawn from the casino it becomes clean money. Unregulated casinos are far more prone to this practice due to the lack of location, identity, and payment verification checks.

Unregulated Casinos and Cryptocurrency

Another major concern regarding unregulated gambling markets is the use of cryptocurrency. Cryptocurrency in itself can provide a number of benefits to consumers, allowing people to make transactions anonymously and instantly. 

However, this very convenient nature of cryptocurrency has created a number of dangers when it comes to its use in online casinos. Online casinos using cryptocurrency are unregulated due to the fact that the currency is not officially recognised and because they often hide the location in which they are operating. 

A study by Fanusie and Robinson in 2018 established that unregulated online gambling services who hide their location, and operate using Bitcoin, were prone to laundering activity and conversion of illicit Bitcoins.

The study found that 52.03% of all the identified illicit Bitcoin activity was being conducted in an unknown location. This therefore highlights the importance of knowing where an online casino is operating in order to ensure its legitimacy. 

Indeed, the Gambling Commission’s website itself acknowledges the prevalence of ‘hacking, theft and other criminal activity associated with digital currencies.’ What’s more, the anonymous nature of unregulated cryptocurrency gambling means that often no age verification checks or deposit limits are enforced.

The Gambling Commission also states that any ‘gambling business wishing to offer gambling facilities to consumers in Great Britain using digital currencies, or virtual currencies that can be exchanged for cash or traded for items of value, most hold an operating licence.

However, due to the hidden locations of these operators, in addition to other techniques used by consumers, such as using VPNs, these operators become virtually impossible to control. The lack of regulation not only puts the users of these operators at risk but creates an environment susceptible to crime.

The Problem of Increasing Gambling Restrictions

It is clear that there is a substantial risk for consumers and the public when it comes to gambling with unregulated casinos. Of course, it is the aim of regulators to keep the public safe when it comes to gambling.

But could increasing restrictions be turning players away from these safe operators and towards those that pose a risk? The Betting and Gaming Council has acknowledged this danger, stating that, ‘Our industry is already heavily regulated. We mustn’t drive customers to offshore, black market, illegal operators that don’t have any of our safeguards, and we do want to see more action taken against the unregulated industry.’

The Betting and Gaming Council has also acknowledged that while they are working to help problem gamblers overcome addiction, regulators and the government ‘have made it clear that there is no evidence that problem gambling has increased.’

Despite this, restrictions continue to expand, frustrating many gamers in the process. Naturally, some restrictions are more well-received than others. Bans on gambling advertising in certain places and use of credit cards have been less controversial. 

Furthermore, age verifications checks have become more robust and online casinos have gladly implemented these changes to help stamp out underage gambling. However, potential further restrictions on stake limits have certainly sent some players packing and seeking out these unregulated sites which simply allow them to bet however much they want.

It perhaps does not help that the Gambling Commission itself has been questioned in terms of its capacity to handle these issues. Many have pointed out the lack of real experience its members hold in the online casino industry. Rather, the Commission may be far more likely to follow political lines.

What is the Way Forward for Regulators?

Far from wanting the regulated arena to be a restriction-free zone, many casinos simply feel that restrictions are going too far and are turning customers away. A balance, therefore, needs to be struck which helps to protect an industry that contributes over £14 billion to the UK economy each year.

Regulated casinos need to remain appealing to players of all types, including those who like to play for the thrill of big money. Without maintaining this appeal, not only will the taxman lose out on a large portion of his revenue, but dangerous unregulated casinos will continue to soar in popularity. 

It is therefore vital that gambling regulators rethink their approach in order to curb the rise of unregulated markets. If player safety is to continue to be the priority, regulators simply cannot go on ignoring the rise of these unsafe operators.