Europe’s black market problem is getting worse, not better
Day four of European Safer Gambling Week sees the conversation move from safer gambling tools and advertising standards to something more confronting. What happens when the industry does everything right, yet players still drift towards the black market?
In a webinar titled Beyond the regulatory perimeter: tackling Europe’s black market challenge, Dr Maris Catania brought together experts from H2 Gambling Capital, Entain, and the Swedish Trade Association for Online Gambling (BOS) to discuss what the data now shows. Europe’s illegal online market is growing again, even in countries that once claimed it was under control.
The session opened with an unvarnished assessment from H2’s Managing Director, Ed Birkin, who sets out the numbers that explain why the issue is becoming so urgent.
A turning point in the data
H2 estimates that in 2025, 27 percent of Europe’s iGaming penetration is offshore, around 18 billion euros. Birkin stresses that black market sizing is not an “exact science”, but after two decades of refining their models, H2 now has a dataset that is strong enough to track clear trends.
The most important trend is not the size of the offshore market, but its direction. For more than twenty years, onshore penetration has risen steadily as more jurisdictions regulate and legal operators grow faster than offshore competitors. In 2023 and 2024 that trend reversed.
“For the first time since we have tracked it, you have seen the offshore channelisation increase,” Birkin says.
This reversal is largely driven by two factors. One is the rapid expansion of crypto casinos, many of which position themselves as crypto native brands even when not all transactions are on chain. The other is regulatory tightening in highly developed European markets, which increases friction for high value players.
H2 forecasts offshore revenue to reach 23 billion euros by 2030, even as the onshore market grows faster overall.
Why players go offshore
There was broad agreement on the reasons players migrate. Entain’s group director of international regulatory affairs, David Foster, sets out the commercial drivers clearly.
Players go offshore for “more attractive bonuses”, “better products that might not otherwise be available” and “odds and prices” that reflect the lower cost base of unlicensed operators. They also go there to avoid regulated requirements. Foster lists “deposit limits, spending limits” and “providing documentation” for KYC or AML as common triggers.
The worrying part, as Catania notes, is how easily some players can stumble across black market offers without even meaning to. Search results in the UK routinely promote lists of non GamStop casinos. On social media platforms, offshore brands normalise their names through memes and influencer content, even when the audience doesn’t realise what they are being exposed to.
Gustaf Hoffstedt, secretary general of Swedish trade body BOS, highlights another blind spot. Many consumers don’t even know which operators in Sweden are licensed. He has seen survey responses where players confidently report that they use unlicensed operators and then name a fully legal one.
The underlying pattern is clear. Casual, low spend players often stay onshore because they value familiarity and safety. High value players, who generate a disproportionate share of GGR, are the most likely to leave.
“It is very likely that the high volume players are within that minority of unlicensed gambling,” Hoffstedt says. “Those are the ones that we really need to reach.”
Where player protection fails
If the intention of strict measures is to protect vulnerable players, the outcome can be the opposite once players step outside the perimeter.
Self exclusion is a stark example. Birkin notes that in H2’s recent Australian survey, “almost 50 percent of players who used illegal offshore wagering sites did so while they were on BetStop”. This is not because BetStop is flawed, but because offshore sites simply ignore it.
The same applies to bonuses, promotional frequency, frictionless onboarding and payment options such as crypto rails. These are the areas regulators tighten to protect players, but they are also the incentives that push high risk players offshore where none of the safeguards apply.
In markets such as Sweden and Norway, where product restrictions and bonus bans are strict, fewer players stay within the legal system. H2’s latest estimate places Sweden’s online channelisation at 72 percent, meaning that only 72 percent of all online gambling spend remains with licensed operators, with the rest flowing to unlicensed sites. The picture is even worse for online casinos, where the share captured by legal operators is much lower.
“The whole idea with a licensing system is to reach out with that jurisdiction’s consumer protection,” Hoffstedt says. “Four out of ten Swedish krona is these days played outside the licensing system.”
Enforcement is not keeping up
The panel was unanimous in the belief that current enforcement tools lag far behind the reality of the market. Payment blocking, DNS blocking and B2B licensing rules are easily circumvented. Meanwhile, other parts of the ecosystem inadvertently prop up the black market.
Foster warns that crypto is a regulatory gap in many countries. Prediction markets in the United States operate in “a regulatory vacuum”. New products appear faster than legislation adapts.
The panelists also criticised the incentives around supply. Birkin points out that some of the most successful content providers still supply games to offshore operators, intentionally or not. If those games disappear from illegal sites, the attractiveness of the black market falls sharply.
“Where is the incentive to go onshore in some markets?” he asks. “For some operators, there is no great incentive to get a licence.”
Fragmentation makes the problem worse
Regulatory fragmentation is another structural weakness. Europe’s markets vary widely in tax, product scope, technical requirements and licensing conditions. For operators already licensed in multiple jurisdictions, this increases cost and complexity. For those without a licence, it reduces the incentive to get one.
Birkin compares it to Argentina’s provincial model, where differing technical frameworks create barriers even when operators are willing to comply. Foster agrees that it is the “compounding effect” that makes operating legally challenging.
Where the speakers align
1. The legal market must be attractive enough to compete.
Consumer protection only works if consumers remain within the regulated system. Over-restriction gives black market operators a competitive edge they do not deserve.
2. Enforcement must shift from blocking to consequences.
Rather than chasing IP addresses, regulators should focus on real world accountability for suppliers and operators. Birkin argues that “there does not seem to be a lot of negative consequences” today for offshore activity.
3. Cross-border collaboration has to become real.
The Dutch regulator suggests an Interpol style body for gambling. The panelists agree that this is overdue. As Hoffstedt puts it, illegal gambling is rarely the only illegal activity involved.
If there is one measure…
Catania ended the session by asking each speaker for one action they would take if they had complete power.
Foster chose international and domestic collaboration. Birkin chose meaningful consequences for offshore activity. Hoffstedt is unambiguous: “The silver bullet is a channelisation goal,” he says. Set it, measure it, and judge every regulatory proposal against it.
After an hour of discussion, a simple truth comes through. Europe does not have a black market problem because players want one. It has a black market problem because regulation, enforcement and incentives have not kept pace with the real world.
If regulators want safer gambling to be more than a slogan, that gap is where the work begins.
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