Black market tops up licensed play, UKGC data shows

• 91% of 122 repeat illegal payers also gambled with licensed operators
• 45% of illegal users with PGSI data scored as problem gamblers, against 6% of licensed players in the sample
• Report lands as UK operators absorb 40% online casino duty and a new machines tax rise

Illegal gambling in Britain looks more like a side bet than an exit, according to a Gambling Commission study of anonymised open banking data.

Published on 28 October, it found that 91% of repeat payers to illegal sites kept gambling with licensed operators.

Tracing illegal payments

The dataset, gathered by YouGov, covers open banking transactions from 38,000 consenting panel members between July 2018 and July 2026. Of 157.2 million transactions, 4.8 million went to licensed non-lottery operators, flagged by a gambling identification algorithm from Yaspa.

Illegal, or unlicensed, operators were harder to catch. Fuzzy-matching known illegal brand names against transaction descriptions found nothing. The Commission said this may mean such operators rarely give their names to payment providers.

Matching bank statement descriptions and merchant names linked to suspected operators eventually surfaced 3,426 transactions from 179 people, with an average age of 44.

Overlap and harm scores

Among the 122 people with at least two detected illegal payments, 91% also used licensed operators. Their licensed activity showed no substantial drop after the first illegal transaction.

Six months before that payment, the group averaged 28.8 licensed transactions per person a month. Six months after, the figure was 23.6. Illegal transactions peaked at 4.9 in the first month, then settled between 1.2 and 1.9.

Illegal payments also arrived in clusters, often close in time to licensed bets. Postdoctoral Data Scientist Steven Murphy wrote in an accompanying blog that the findings challenge the idea of illegal play as a direct substitute for legal gambling.

PGSI scores were available for 146 of the 179 people. Of those, 45% scored eight or more, the threshold for problem gambling. Among the 12,543 licensed non-lottery gamblers in the dataset, the figure was 6%.

Some 17% of illegal users scored three to seven, compared with 9% of licensed customers. Only 26% scored zero, against 68% on the licensed side.

The panel is not nationally representative, so these figures describe the study sample only. Credit cards, barred for licensed gambling since April 2020, accounted for just 4% of illegal transactions.

UK tax pressure builds

The report landed on the day Chancellor John Healey delivered his first Budget. He lifted Machine Games Duty from 20% to 25% on higher-stakes machines, effective April 2027.

That sits on top of the 2025 Autumn Budget package. Remote Gaming Duty rose from 21% to 40% in April 2026. A new 25% remote betting rate follows in April 2027, with UK horseracing excluded.

Operators have tied those rises directly to the black market. Flutter, which has proposed up to 1,400 redundancies in the UK and Ireland, said through UK and Ireland CEO Kevin Harrington that the duty increases were helping to fuel the unlicensed market.

Entain made the same case when it put a £25m annual cost on the machines rise, before mitigation.

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’s findings complicate that narrative without settling it. Its dataset runs to July 2026, just four months into the 40% rate, and the regulator says it cannot be used to size the illegal market.

Limits and next steps

The Commission said the study design cannot show whether spending with illegal operators causes harm. It covers only fiat payments from banks supporting open banking, so cryptocurrency deposits are missed.

Separate Commission research has linked the search for sites requesting little personal data with illegal gambling use. The regulator called this latest work a proof of concept and wants to expand its use of financial transaction data with banks and payment providers.

For licensed operators, the date to watch is April 2027, when higher betting and machine duties land in the same month. A repeat of this exercise on data from that period would give the first direct read on whether customers keep a foot in the regulated market once the full tax load arrives.