Racing's Betting Black Market Boom: From Smartphones to Cheltenham
The thriving black market is no longer confined to shadowy offshore websites and continues to make its way into mainstream UK sport
No racing event holds more significance for bookmakers than the Cheltenham Festival. This truth holds regardless of whether firms operate within legal bounds or skirt them, as was strikingly evident at the pinnacle of jump racing last March.
The Cheltenham Festival draws the presence of numerous major bookmaking firms, some engaging directly in betting activities while others leverage the four-day spectacle for brand promotion through race sponsorships and hospitality offerings. Nearly all these firms maintain strong connections to an event deeply intertwined with the household names of the betting industry. Yet, Cheltenham also proves advantageous to less recognised entities.
This was notably illustrated last year, as recounted by Fitzdares CEO William Woodhams. While hosting clients at Cheltenham, Woodhams observed representatives of a sizeable online operator, licensed in the Caribbean's Curacao but suspected to operate from Montenegro, approaching some of his guests. Despite lacking regulation from the UK Gambling Commission and thus being ineligible to serve UK customers, this entity, ostensibly focused on cryptocurrency, reportedly accepts bets and pays out winnings in British pounds, even on British horse racing. Sources suggest a notable figure within the organisation boasts connections within high society and the sport itself.
"In the last 18 months we've seen a sustained attempt by offshore bookmakers to engage our customers," says Woodhams.
"We even discovered an employee of one operator offering free bets to our members in the Fitzdares Club at the Cheltenham Festival. There is perverse irony that offshore operators can take boxes and entertain at racecourses even though they don't contribute to the data, levy and tax costs that fund the racecourses."
This narrative exemplifies how the thriving black market is no longer confined to shadowy offshore websites or anonymous personas on encrypted messaging platforms. Instead, it increasingly operates openly, sometimes with well-known figures at the forefront, providing tailored, unrestrained betting services to high-stakes punters, including owners and trainers. Such services are becoming inaccessible to many via the regulated market due to the implementation of affordability checks.
While the global scale of the illicit gambling market is substantial, historically, it represented a small fraction of UK betting activity, owing to the country's diverse and advanced regulated market. However, its growth is now exponential. A report by PricewaterhouseCoopers (PwC) commissioned by the Betting and Gaming Council revealed that the amount wagered by UK online gamblers in the unregulated sector doubled to £2.8 billion in the preceding one to two years. For British horse racing, this trend poses significant risks, as calculated by the British Horseracing Authority (BHA), estimating a loss of £1 million in levy funding and approximately £1.5 million in media rights for every £10 million of gross win diverted to the black market.
Accessing unlicensed offshore operators via simple online searches has become effortless. These platforms appeal to individuals facing difficulties betting with regulated bookmakers due to affordability checks or account limitations. Moreover, many of these offshore entities explicitly target individuals registered with the UK's Gamstop service, which restricts access to bookmakers.
A quick Google search for 'non-Gamstop bookmakers' yields 441,000 results, with listings such as '31 Most Trusted Betting Sites not on GamStop 2024', 'Legit UK Betting Sites Not On GamStop', and 'Non Gamstop UK Betting Sites 70+ Legit Sites Ranked'.
Illegal betting manifests in various forms. While some bettors excluded from the regulated market turn to alternative online platforms found through search engines, high-stakes gamblers are increasingly enticed by an informal network of seemingly reputable agents, often operating on WhatsApp. These agents, unlicensed and thus contributing nothing to British racing or the national treasury, are believed to represent the lowest tier in a pyramid of escalating liquidity, with organised crime syndicates and money laundering operations occupying the upper echelons.
How Big is the Problem in Racing?
At the forefront of the sport's endeavors to gain insights into the illicit betting underworld stands the Hong Kong Jockey Club and the Asian Racing Federation Council on Anti-Illegal Betting and Related Financial Crime. Described by the HKJC last year as "the number-one threat to the integrity of racing," this clandestine market has prompted concerted efforts from these organizations.
Emphasising the gravity of this threat and the magnitude of the black market, Tom Chignell, HKJC's executive manager for racing integrity and betting analysis, states:
"The offering on horseracing by illegal and under-regulated operators has increased in the last few years – the United Nations Office on Drugs and Crime estimates a total of US$1.7 trillion is bet illegally annually. An example of this is that large crypto market-based operators are offering fixed-odds betting on global racing, including British racing.
"Integrity investigations are compromised when operators fail to provide account-level detail with regulators. Betting operators who rely on agent networks to manage their customers often do not actually know who their customers are due to the agents blurring the audit trail between the operator and the customer and lack of KYC [know your customer] processes."
"Some believe the UN estimate now falls far short of reality. Technical intelligence platform Yield Sec says the true figure could be $5.1tn, although working purely to the UN's calculation, it believes the $1.7tn being bet illegally translates to a profit for those operators of $340bn, "dwarfing legal gambling profitability by more than eight times".
Examining the ramifications of the burgeoning black market in Britain, Martin Purbrick, consultant for GVS EQ and former director of security and integrity at the Hong Kong Jockey Club, comments:
"In Britain, all consumers enjoy unfettered access to a vast array of online betting and gambling platforms on the internet. Expert analysis indicates that a significant portion of these platforms operate without licenses, constituting illegal operations at the point of sale. Many of these entities are controlled by prominent organised crime syndicates, particularly from Asia.
"We know from analysis and reporting from around the world that consumers are attracted to these online illegal betting markets because of price, product and customer experience. This is no different in the UK. The UK, without doubt, has a problem with a growing number of consumers going to online illegal betting operators. Our challenge is measuring this.
"Consumer access to illegal betting is not immediately measurable, largely because online betting customers do not respond honestly to survey questions that ask if they have taken part in an illicit or illegal activity. So we know from the expert analysis and reporting that the illegal betting and organised crime problem is huge, but we have difficulty knowing exactly how many consumers bet in these markets."
Purbrick adds: "If any online betting operator that does not have a licence in the UK accepts bets from consumers in the UK, ie at the point of consumption, then this is surely a criminal offence under the Gambling Act. However, there is no apparent enforcement action by the UK gambling regulator against offshore online unlicensed betting operators and also no major commentary regarding the problem.
"Considering what we know from expert analysis regarding the large amount of unlicensed – and usually illegal at the point of sale – online betting operators, this seems to be a major gap in UK enforcement activity."
Clarifying its stance, the Gambling Commission asserts its commitment to investigating allegations concerning unlicensed gambling platforms. In assessing such cases, the Commission evaluates whether operators have made efforts to prevent UK consumers from accessing their services. The regulatory body collaborates with a range of stakeholders, including HMRC, banks, website hosts, and payment providers. Notably, there were 452 enforcement actions taken in the fiscal year 2022-23, a substantial increase from 89 actions in the previous year. Additionally, the Commission indicates that in the same period, it referred 7,048 individual website domains to Google for potential removal from search results.
Is It Too Late?
During his appearance before the Culture, Media, and Sport Select Committee in September, Andrew Rhodes, chief executive of the Gambling Commission, stated that the scale of the black market is "extremely limited." This remark surprised other regulatory bodies, experts, and the British Horseracing Authority (BHA).
The Racing Post's 2023 'Big Punting Survey' revealed that 3.6 percent of respondents had engaged with a black market operator in the past year. More recently, the Horseracing Bettors Forum conducted its own survey, which indicated that 73 percent of the 296 participants would contemplate utilising the black market if bookmakers demanded additional private information for continued betting access.
Nevertheless, concrete evidence of increased black market usage remains largely anecdotal. One better, referred to as 'Mike,' who has maintained regular communication with the Racing Post but opts for anonymity due to the sensitivity of the subject, has already crossed into black market territory. Mike found affordability checks to be intrusive and unacceptable, prompting his shift away from regulated platforms.
He says: "Following UK bookmaker restrictions I could only use Betfair, which then asked to see my financial papers to carry on using their platform. I will never hand over any financial documents to any bookmaker and nobody should. I refused to hand over the documents and they closed my account."
"The black market bookie I use is licensed in Curacao and it's fantastic. Now I have no stake restrictions, no affordability checks, good continued deposit bonuses and withdrawals the next day into my UK bank. All you need to do is prove your ID and address on opening the account, which is fair enough. There will, of course, be no UK levy kickback from my bets anymore and British racing will therefore suffer.It's a farce."
"I have no concerns about using the black market and have recommended my black market bookie to lots of friends who were in the same boat as me regarding restrictions and affordability checks."
Mike, naturally, should be apprehensive, considering the absence of legal safeguards associated with patronising an offshore bookmaker. However, he is among numerous individuals who have realised that locating illegal bookmakers—or being located by them—is remarkably straightforward.
"I know people who could send me down the black market route but I wouldn't want to do that because it's no good for racing," trainer Ed Bethell told the Racing Post this month. Professional punter Neil Channing has received similar overtures.
"The number of people who have offered me the black market facility of a WhatsApp bookmaker I vaguely know has doubled from two to four in the last year," says Channing.
"There are people I know who are using black market bookmakers who probably did that in the past but they are now using them more formally on a day-to-day basis due to affordability checks. I know someone who always used to bet with regulated companies who has no chance of passing affordability checks and can maybe now deposit £100 a month, which equates to his average bet. He is now using the black market.
"Another guy I spoke to has a big Betfair account and found people asking him to place bets for them because they were over their monthly deposit limit. He now lays those bets himself. In effect, he is operating as an illegal bookmaker. That sort of thing must be happening quite a lot.
"Also happening much more is big punters and big punting syndicates trading with each other. Syndicates with ten people who have £1m or £2m between them and bet £10,000 or £20,000 all talk to each other and they all lay each other bets. It equates to illegal gambling and loads of it is happening – and there is more of that now than there used to be."
"The vast majority of customers who go black return after a year due to some rather shoddy business practices. Who wants to risk their deposits in another jurisdiction?"
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