There is a need for a multifaceted strategy, robust regulatory frameworks, advanced technological interventions, and international cooperation to address the complexities of illegal gambling, a recent criminology research report shows.

The study, published in the June 2024 issue of the Journal of Economic Criminology, sheds light on the complexities and challenges of defining and estimating the illegal gambling market.

Conducted by researchers Julien Chopin, Lucas Tosi Rodriguez, and Stefano Caneppele from the University of Lausanne, Simon Fraser University, and Laval University, its review covers literature from 2000 to 2023.

It underscores the significant economic and social implications of illegal gambling, emphasizing the need for effective policy formulation and enforcement. Through an analysis of 31 selected studies, the review reveals the intricacies of defining illegal gambling activities, compounded by legal, cultural, and regulatory differences across jurisdictions.

Key Findings and Challenges

The research centers on how the clandestine nature of illegal gambling presents numerous challenges, including consumer protection issues, fraud, organized crime, economic impacts, and regulatory hurdles.

The study points out, for example, that illegal gambling operators are not subject to the same consumer protection regulations as legal operators, leaving consumers vulnerable to unfair practices, non-payment of winnings, and inadequate dispute resolution mechanisms.

Moreover, the absence of age verification and responsible gambling measures in illegal markets increases the risk of minors participating in gambling activities, potentially leading to gambling addiction and underage gambling problems.

It also addresses ‘issues related to fraud and organized crime […]. Illegal gambling markets are susceptible to fraudulent activities, including match-fixing, manipulation of outcomes, and other forms of corruption,’ it notes.

‘Criminal organizations may exploit these markets for financial gain. For instance, several works noted that illegal gambling often attracts organized crime syndicates, leading to concerns about violence and other criminal activities associated with these groups. Indeed, illegal gambling can be used as a channel for money laundering, allowing criminals to convert illegal funds into seemingly legitimate winnings or losses’.

‘Illegal gambling operates in the shadows of legality, posing a formidable challenge to society, regulators, and researchers. The literature review underscores the difficulty in defining and assessing this illegal market, emphasizing the interplay between evolving technologies, regulatory frameworks, and enforcement measures,’ the researchers point out.

The study also identifies the duality of estimation approaches—bottom-up and top-down—reflecting the complex nature of illegal gambling, deeply rooted in local contexts yet sprawling across global networks.

The findings are described as having critical implications for policymakers, regulators, and the broader research community, as they underlined the ‘complexities and challenges identified necessitate a multidimensional approach that transcends traditional regulatory and enforcement mechanisms’.

Policymakers are urged to consider the fluid nature of illegal gambling, including new technologies and platforms, to devise regulations that effectively mitigate associated risks. This may involve revising existing gambling laws to encompass online and emerging forms of gambling.

Enhanced consumer protection measures are also essential to safeguard against fraudulent practices and the risks of addiction in the illegal gambling sector.

For regulators, effective enforcement is crucial in combating illegal gambling operations. Innovative strategies leveraging advanced technologies for monitoring, detection, and prosecution are necessary.

‘Collaboration with technology companies, financial institutions, and international law enforcement agencies can strengthen enforcement capabilities. The transnational nature of illegal gambling operations highlights the importance of international cooperation among regulatory bodies,’ it highlights.

The study also calls for methodological innovations in estimating the size and scope of the illegal gambling market.

The available literature concerning methods for estimating illegal markets was said to be limited and primarily comprises expert reports produced by consulting agencies or organizations involved in the management of legal gambling markets.

The research in question used analysis from entities such as CK Consulting and the Asian Racing Association or Singapore Pools.

Researchers were encouraged to explore new data collection techniques, analytical models, and estimation methodologies, including big data analytics, artificial intelligence, and machine learning algorithms.

Interdisciplinary research collaborations across fields such as law, economics, psychology, computer science, and sociology can provide comprehensive insights into the drivers, impacts, and effective interventions for illegal gambling.

Economic and social ramifications

The research warns that illegal gambling’s ramifications extend beyond financial losses to governments in the form of evaded taxes. They impact society by fostering conditions ripe for fraud, organized crime, and exploitation of vulnerable populations.

‘The market’s opacity complicates efforts to delineate its boundaries and obstructs initiatives aimed at ensuring transparency, integrity, and consumer protection within the broader gambling ecosystem,’ the report notes.

The review highlights that, while valuable, current estimation studies are one-time efforts and do not enable real-time monitoring of the constant evolution and changes in the illegal market.

Concerted efforts from researchers, policymakers, and regulatory bodies are required to tackle the challenges posed by illegal gambling effectively.