BETTER REGULATION
Regulatory design & the online gambling black market: four determinant failures CARLOS ALBERTO FONSECA SARMIENTO ARGUES THAT THE BLACK MARKET HAS TO BE TACKLED BY BETTER REGULATORY DESIGN AS WELL AS ENFORCEMENT
market integrity, and protecting consumers. Regulation can no longer be conceived as static; rather, it must operate as an adaptive process in response to a constantly evolving digital market. As an economic and social activity characterized by persistent demand, online gambling does not raise the question of whether it should exist, but how that demand should be effectively channeled through appropriate legal frameworks. Accordingly, regulatory debates increasingly focus on the quality of regulatory design and its ability to integrate – rather than exclude – existing demand. Comparative experience demonstrates that well-designed regulatory frameworks 1 can generate substantial public and economic benefits, including tax revenues, consumer
Introduction The online gambling black market is not merely a failure of enforcement – it is often the predictable result of regulatory design. Gambling has existed throughout history and continues to evolve in different forms. What distinguishes the present moment is the unprecedented pace at which online gambling is expanding globally. This growth has been driven by cross- border service provision, the emergence of new products – such as sweepstakes casinos and prediction markets – and the integration of disruptive technologies, including artificial intelligence. This context requires a higher degree of regulatory dynamism from states, aimed at safeguarding public interests, ensuring
1 Illustrative examples include jurisdictions such as Malta (where the regulatory process for online gambling began in 2000, with more structured
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IMGL MAGAZINE | JUNE 2026
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