Asian gambling regulators risk causing more harm than good if they tighten controls too far on licensed operators, as stricter rules are driving punters into unregulated markets dominated by organized crime, a new report warns.
The report, From Regulation to Risk: Illegal Markets and the Inadvertent Growth of Gambling Harm by Over Regulation of Legal Markets, by Martin Purbrick, chairperson of the IFHA Council on Anti-Illegal Betting and Related Crime, argues that over-regulation of legal gambling can ‘inadvertently drive consumers to illegal markets and consequently cause greater risk of gambling harm.’
The shift has accelerated since the Covid-19 pandemic, which shuttered casinos, suspended sporting events and left millions of people betting from home. While licensed firms struggled under regulatory limits, illegal operators adapted swiftly, offering a wider menu of products with no oversight or consumer safeguards.
‘Illegal betting growth is faster than legal markets’, Purbrick wrote. ‘Operators outside the law prey on vulnerable groups including minors, young adults and high spenders, while providing no responsible gambling measures.’
The World Health Organization estimates that 1.2 percent of the global population suffers from gambling disorder. But Purbrick argues that the bulk of this harm stems from illegal markets, particularly in Asia, home to 60 percent of the world’s people.
Asia’s illegal betting boom
The report highlights how restrictive or non-existent legal markets in Asia’s most populous nations have allowed illicit platforms to flourish.
In India, where betting on cricket is largely outlawed, annual deposits in illegal gambling are estimated at nearly $100 billion. A 2023 Lancet article found problem gambling prevalence at 7.4 percent, but Purbrick notes most of this occurs outside regulated channels.
China, where only state-run lotteries are legal, recorded nearly $99 billion in lottery sales last year. Yet gambling addiction rates of 2.5 to 4 percent – well above Western averages – suggest the underground market remains vast and damaging.
Indonesia, Pakistan and Bangladesh, all of which prohibit most forms of gambling, have seen rapid growth in online platforms, often hosted abroad. Jakarta set up a dedicated anti-gambling task force in 2024 after an estimated 3.7 million Indonesians wagered over $20 billion illegally.
In Bangladesh, despite official efforts to block sites such as Bet365, a new wave of homegrown platforms has emerged, prompting experts to warn of a ‘silent epidemic’ of addiction.
‘Across Asia’s five biggest countries, the greatest driver of gambling harm is the illegal market’, Purbrick concluded.
Sports betting vs online casinos
The study stresses the need to distinguish between different gambling products, noting that sports betting and horse racing are less strongly linked to addiction than electronic gambling machines and online casino games.
Research from Sweden, Australia and Finland cited in the report shows that high-frequency, repetitive games such as slot machines and online roulette carry far greater risks than betting on racing or football, which are slower-paced and involve more skill.
Purbrick suggests regulators should separate customer accounts for sports betting and casino games to prevent crossover, and adjust taxes to reflect relative risk – keeping levies low for sports betting but higher for online casinos.
Over-taxation, he warned, can push punters toward illegal sites, shrinking tax revenue while raising social costs.
The analyst also acknowledges that governments have a duty to limit gambling harm, but says poorly calibrated rules are counterproductive. ‘An effective legal betting market is critical’, he wrote. ‘If consumer demand is not satisfied, people will inevitably turn to illegal markets where the risk of harm is far greater.’
He urged regulators to adopt a more ‘balanced’ approach that protects consumers without stripping legal operators of their competitiveness.
‘As gambling markets continue to change at a startling pace’, the study concludes, ‘governments must recognize that over-regulation of legal operators risks doing the very opposite of what it intends: driving more people to illegal gambling and causing more harm.’
