In the shadows Australia’s black-market gambling scourge

Inside Asian Gaming takes a deep dive into the rise of black-market gambling in Australia – both land-based and online – exploring the causes and effects as well as the policy directions that could help fight the problem.

The rapid growth of black-market gambling is a global concern, consistently flagged by national regulators, industry bodies such as the American Gaming Association, and governments like the Central Chinese government in Beijing, which has long opposed gambling in all its forms.

Across Asia, a part of the world where land-based gaming is the dominant platform, illegal black-market operations are most prevalent in the online space – a consequence of the absence of regulated online gambling across the majority of the region.

One important takeaway from this is that illegal gambling platforms will typically manifest wherever there is a void in the availability of legal options to satisfy a thirsty customer base. It was for this very reason that New Zealand recently announced plans to regulate online casinos, with Paul James, Secretary of Internal Affairs and Chief Executive of the Department of Internal Affairs Te Tari Taiwhenua, telling attendees of the Regulating the Game conference in Sydney in mid-March that the initiative is designed to “nudge or channel people away from unregulated, unlicensed, to regulated and licensed.”

But it is New Zealand’s nearest neighbor, Australia, where the impact of policy direction on the proliferation of black-market gambling is most stark.

Australia has long enjoyed a thriving gambling industry, supported in the land-based sphere by a state-based regulated casino sector – there are 14 legal casinos nationwide – and a massive “pubs and clubs” market where electronic gaming machines are permitted under license. The more than 170,000 EGMs in operation nationwide represent one of the highest concentrations of slot machines anywhere in the world.

Australia has 13 legal casinos nationwide and a massive “pubs and clubs” market where electronic gaming machines are permitted under license.

In the iGaming space, online casinos and poker are strictly prohibited, however online sportsbooks are legal and flourishing, as evidenced by the presence of well over 100 licensed sites offering sports and racing wagering.

Market leader Sportsbet generated revenues of over US$1.3 billion in 2025, according to parent company Flutter’s Annual Report.

Despite this, illegal offshore gambling sites targeting Australian players have become an increasingly pertinent issue, with research by H2 Gambling Capital – commissioned and recently released by lobby group Responsible Wagering Australia  (RWA) – finding that Australians are losing AU$3.9 billion (US$2.7 billion) each year to offshore operators, a figure expected to grow to AU$5 billion (US$3.5 billion) by 2029.

Alarmingly, offshore makes up 36% of all online gambling across the country, and it is accelerating at pace – growing 2.5 times faster than the onshore market. The cost to the Australian tax payer is estimated to be around AU$3 billion (US$2.12 billion) over the next five years.

“The reason people are using the offshore space is that 44% can’t distinguish between licensed and unlicensed providers,” explained RWA CEO Kai Cantwell during a panel session on the topic of black-market gambling at Regulating the Game that was moderated by Inside Asian Gaming.

“Half of people are using these offshore sites for better odds, better promotions and access to things like live in-play betting – things where we’ve regulated it to the point where people cannot access the same odds or same product onshore.”

The H2 Gambling Capital report highlights access to live in-play betting – a betting option that is not permitted under Australian gambling laws – as the single most influential driver of local players to offshore sites.

“What we are seeing with these offshore providers is they are targeting people through products they know and that are legal in Australia,” Cantwell continued.

“That means they are targeting people through wagering and race betting, and then they transition quickly into products that are illegal in Australia [like online casino]. It is a real targeted approach to drag people into illegal online gaming in Australia.”

The land-based sector is facing its own black-market challenges, as evidenced by the growing spate of underground casinos and poker rooms being detected by authorities in the very same cities where legal casino gaming already exists.

The trend appears to be a direct response to significantly tightened regulations governing the casino sector in the wake of the recent inquiries into Crown Resorts and Star Entertainment Group, which between them operate six of Australia’s 14 licensed casinos. Material changes include mandatory carded play, incredibly stringent KYC processes and source-of -income checks, limits on how long people can play – typically 12 hours a day and 36 hours a week – and restrictions on cash use.

Pubs and clubs have not been impacted because those same restrictions do not apply to them.

Crown’s Chief Risk Officer, Armina Antoniou, says the full impact of underground operations is hard to measure but noted there have been “multiple raids in the jurisdictions that we operate” over the past few years.

“A lot of those we have become aware of through team members, because they are on the floor talking to or hearing customers speak amongst themselves, and reporting that back to us,” she said.

“It’s really hard to quantify, but that’s why it is called the black market and for us, it is a problem.”

Asked what she believes is driving the black-market industry, Antoniou added, “The uneven regulation. The regulation across the different types of gambling in Australia is not equal. There is significant regulation in the casino space such as mandatory carded play, which is in all of our three casinos at Crown. This is not applied to the same types of machines that can be found up and down the east coast of Australia (in pubs and clubs).

“Another reason is potential over-regulation. What I mean by that is if you regulate gambling so much that it begins to impact normal punters, and as a result they want to go to someone that’s less regulated or completely unregulated, that’s a failure of public policy, in my opinion.

“So, I think we need to think about the objectives that this regulation should have across the whole board.”

Complicating the issue for industry and enforcement agencies alike is that, unlike the third-rate, unsophisticated black-market operations of old, today’s exponents – be they underground casinos or offshore gambling websites – offer a far more attractive product that in many instances can be difficult to distinguish from the real deal.

Michael Phelan, a Strategic Advisor for Kroll and former CEO of the Australian Criminal Intelligence Commission (ACIC), points to one such venue raided by Victorian police last year that “looked just like a normal casino floor,” even though it was a short-term warehouse rental designed to be moved around on a regular basis.

David Foster, Group Director of International Regulatory Affairs for Entain, which operates the Ladbrokes and Neds online sportsbooks in Australia, says the quality of the product black-market operators now provide is “significantly higher” than it used to be.

“I’ve been in the industry for about 12 years now, and at the beginning, when we started talking about black-market gambling, it was perceived as a slightly abstract idea. It was mainly a self-serving phrase that the industry would use to avoid over-regulation,” he said. “But I think over time it has become very clear that [the black market] exists. It’s very clear that it’s growing, and it’s very clear that we need to do more to tackle it.

“At the same time, these [illegal operators], the quality of their product is very, very good as well as being very good value [for players] because [the operators] don’t have to comply with overheads like taxation costs.

“So, they’re offering value in terms of bonuses, in terms of odds, and the way in which they market is predatory. Very often they’re targeting the most vulnerable players, and they are honing their methods in a very nefarious way, which is also contributing to the growth of the market.”

Despite the brazenness of black-market operators, stopping them remains incredibly challenging. In the land-based space, recent high-profile police raids in Sydney, Melbourne and Perth have relied on tip-offs and authorities being nimble enough to act before the operations they are homing in on pick up and relocate to a new location.

Online is even more challenging, particularly when operators are based overseas and more often than not hiding behind lax licensing regimes.

The agency predominantly responsible for policing this, the Australian Communications and Media Authority (ACMA), has previously detailed its efforts to establish contact with regulators on the Dutch Caribbean island of Curaçao and the meetings it held upon doing so, at which it outlined the growing number of operators licensed there that were breaching Australian law by targeting Australian players.

Curaçao has since made efforts to tighten oversight and in 2024 introduced a new regulatory framework – largely in response to pressure from the Netherlands, of which it is a constituent country. However, many of those operators targeted by the ACMA have simply relocated to places like Anjouan, an island in the Comoros off the African coast, a relatively new market entrant to the licensing space which sources say is proving even more difficult to get answers from.

Carolyn Lidgerwood, Authority Member at the ACMA, said the agency is constantly looking for innovative methods of combatting the scourge of offshore operators targeting Australians because traditional enforcement methods, like issuing fines or taking companies who have breached regulations to court, do not apply in this space.

“There are a whole lot of different things we do – some of it public and some of it not – and you won’t necessarily see the things we do,” Lidgerwood said.

“We have been going after suppliers, though,” she added, referencing a method that has also been adopted by Philippines regulator PAGCOR recently with the goal of discouraging industry suppliers from working with unlicensed operators. Those that do risk being blacklisted.

“We also go after directors if we can identify who the directors are and if we can contact them,” Lidgerwood explained. “Even if they don’t have a direct Australian connection, we can let them know that if they are interested in ever visiting Australia they might not be allowed if Home Affairs put them on a movement alert list. That’s a recourse we have.”

Lidgerwood also responded to a common criticism of the takedown notices it regularly issues to internet service providers relating to offshore gambling operators, which detractors often refer to as a “whack-a-mole” approach because sites can simply change URLs.

“What we find in practice is that, over time, you notice a difference,” she said.

“We monitor the traffic to these sites. We keep blocking them. When people go onto the sites, they get a notice saying, ‘This is an illegal site’. And, over time, the traffic does decline.

“But this is a complex problem, and we are trying to be as agile as we can in a very challenging regulatory environment.”

Abbott’s successor Malcolm Turnbull added further hikes to tobacco

While there is no quick fix to the rise of illegal gambling in Australia, the industry is largely united in identifying certain levers that can be pulled.

The most obvious of those relates to policy and the historical lessons of prohibition. In fact, one tangential example that is garnering significant attention in Australia right now is the so-called “tobacco wars”.

In 2013, the ruling Liberal Government under Prime Minister Tony Abbott announced it would introduce four annual tax hikes of 12.5% each on tobacco products, adopting the theory that higher prices would mean fewer smokers. The policy was later continued for a further four years by Abbott’s successor, Malcolm Turnbull, resulting in the cost of a standard packet of cigarettes soaring from below AU$20 (US$14) in 2013 to around AU$60 (US$43) today.

However, rather than cut smoking rates, the policy instead fueled a thriving illicit tobacco industry and violent gang wars between rival factions competing for control of this new multi-billion-dollar black market supply chain.

It is a similar issue that is impacting the gambling industry.

In the land-based sector, the stringent regulations now imposed on Australia’s licensed casinos have provided an avenue for underground operators to emerge, offering a product with more appeal to price-sensitive customers and without the extensive KYC and responsible gambling checks they must go through to place a bet on a real casino floor.

In the online space, restrictions around live in-play betting and the ban on online casinos and poker have opened the door for offshore operators to provide these products, which remain very much in demand from customers nationwide.

According to Cantwell, a critical first step in addressing these challenges – possibly the most important step of all – must therefore be to educate policymakers on the counter-intuitive fact that the best way to protect Australians is not to restrict but to ensure they have access to products that are licensed, regulated and safe while providing the full array of entertainment options they desire.

“Industry should be promoting our brands as legal devices that are safe and making sure that we also point out the risks of moving into that black market space,” Cantwell said. “The risks are significant for the country, and we as an industry need to be united.

“We can certainly unite behind a few common principles and common goals, particularly around offshore or legal gambling, so as to provide consistent narratives to decision makers and help inform them, because they’re not always particularly well informed. Certain regulators are, but a lot of decision makers are not.

“There is a lack of understanding amongst decision makers in governments around the country about what the illegal offshore market or the black market is, when it comes to gambling, and how to address it.

“So, the key for me is getting that consistent messaging in front of decision makers and to start to inform them about the risks and potential solutions.”

From an enforcement perspective, there remain serious questions over the modest expectations placed on Australia’s financial institutions when it comes to identifying suspicious transactions and real-time monitoring of customer behavior and spending habits.

Entain Australia and New Zealand CEO Andrew Vouris addressed this concern during a keynote address of his own at Regulating the Game, stating, “The banks must know that some of these transactions that are occurring in cash from their customers are going to illegal offshore gaming and wagering operators, and they need to be held to the same standard that the regulated wagering operators are here in Australia.”

On the ground though, there is evidence that recent tensions between industry and regulators are easing and a more collaborative approach is taking shape. This evolving relationship is demonstrated by an AUSTRAC-led initiative called the Fintel Alliance, through which gambling operators, banks, remittance service providers, law enforcement and government agencies from Australia and overseas work together to share intelligence and deliver innovative solutions to detect, disrupt and prevent serious crime. Operator partners include Crown Resorts and racing and wagering giant Tabcorp.

“In my view, information is gold,” explained former ACIC head Phelan, a vocal exponent of the theory that enforcement is much easier when an industry is licensed than when hiding in the shadows.

“It is the sharing of information that’s really, really important – particularly in this time and age – because what I found [as head of the crime commission] was that law enforcement agencies and security agencies were much better placed when they worked with the private sector on a strategic basis rather than on a transactional basis.

“At the ACIC, we entered into some strategic partnerships with the private sector, and it was very much a two-way street. We had them security cleared and were therefore able to give them the topologies of the particular crimes we were seeing right across the globe and in Australia and share them with industry to get their insights.”

Added Foster, “What we (Entain) are trying to do now is move the discussion away from words and rhetoric and more towards concrete actions and tangible solutions. What we’re trying to do as an operator is partner with regulators, partner with policymakers, law enforcement to help them in their objectives, which on this occasion we’re very much aligned with.

“It’s not always that the policymakers, the operators, the regulators, consumers, authorities are all aligned, but on this topic, we really are, so we’re trying to use that in a number of different ways.

“There has been a lot of research done in recent years around the size of the black market and the scale of the problem, but delving a bit deeper, what does that look like in terms of player protection and consumer harms. What does it look like in terms of criminality? Who are the organizations that are behind this?

“One of the things that we’re trying to do at the moment is to develop a playbook –

a suite of different enforcement mechanisms and options that have been tried and tested around the world. Some of these have been deployed already, some are in the conceptual stage, and they are broken down into three sections.

“The first of these is dismantle, which is identifying and breaking up the ecosystem. Next is disrupt – how do we stop these operators, how do we stop these suppliers, how do we stop the payment providers [that are operating in the black market]. And finally there is deter – how do we stop it from happening again?

“That’s something we are iterating at the moment, that we will be demonstrating to all our regulators, and hopefully we can continue to build on these partnerships and move things forward in the right direction.”