ILLEGAL GAMBLING
be from outside the country in which the online products are offered. Usually the regulating authority will have lesser requirements in many respects, compared to (a) other such more legitimate regulatory regimes and (b) the regulatory authority in the territory in which the online products are offered. These requirements often relate to Anti- Money Laundering, Source of Wealth, Age Verification and Affordability checks. The benefits of holding a license, in addition to lending a degree of ‘legitimacy’, relate mainly to the ability to process financial transactions. However, whilst it is more difficult to access Payment Service Providers (PSPs) in instances where no license covers the online offerings, there is ample evidence to show that, despite this, many unlicensed operators still manage to move money in terms of deposits and withdrawals. This is either because there are PSPs who are prepared to run the risk of providing services to them or that other methods of payment such as cryptocurrencies are being used. The role and responsibility of regulators When assessing the effectiveness of a regulatory body in tackling the black market, it is crucial to look closely at the purpose of regulating the online gambling and sports betting industries. At its simplest, regulation achieves, or at least should achieve, two fundamental outcomes:
regulators are not solely responsible for the laws, rules and regulations relating to online gambling and are, depending on the territory, empowered or constrained by politicians and legislation. This may limit what they can and cannot do. Between them, politicians, legislators, judiciaries, enforcement agencies and regulators all have a duty and responsibility to their respective territorial residents to ensure that the black market is as limited as possible. Whether we are talking about regulators per se or the source of regulatory requirements, they will all henceforth be referred to as ‘regulators’. Onerous administrative processes One of the reasons that customers elect to gamble on black market sites is that many regulatory regimes apply overly invasive and administratively complicated onboarding processes, for example, relating to affordability and source of wealth. Simply speaking, your average online gambling customer wants an entertaining, seamless and quick experience, where money is deposited, wagered, and, in the event of a win, easily withdrawn. Any justification that these relatively invasive checks are necessary on the basis of social responsibility or prevention of crime is lost on this customer base. Linked to this is an increasing belief among many consumers that how their money is earned and spent is nothing to do with governmental authorities or the ‘nanny state’. This is one of the reasons that cryptocurrency has increased in popularity over the last decade and should not be ignored. Negative effect of commercially non- viable regulation on the industry In addition to overly invasive onboarding checks, a commercially non-viable regulatory regime will display one or more of the following features: • Relatively high gaming and other applicable fees and taxes -Considering the associated costs of running a commercially viable online gambling business, there is a
1. The protection of customers; 2. The generation of fiscal revenue.
By extension, any regulatory body which is not achieving these outcomes could, arguably, be labelled ‘irresponsible’, or ‘not fit for purpose’.
The link between the black market and irresponsible regulation It is reasonable to conclude that, to a large extent, the proliferation of black market products within a certain territory is an indication of regulatory failure. This will be more fully addressed below. That said, it is important to understand that
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IMGL MAGAZINE | DECEMBER 2024
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