Crackdowns simply lead to the aggregators, and payment service providers behind online wallets, very effectively hiding the
transactions, and these payment masking methods are seen by Yield Sec to change frequently, sometimes as much as hourly across
marquee events like World Cup and Premier League football matches, to protect revenue to illicit operators.
you get rid of the consequences of crime. Regulators and governments need a toolkit that includes talking to and rehabilitating unlicensed brands. Tere needs to be a reckoning against those brands for previous sins, but as part of this process the ‘soft criminals’ need to be in the room, a part of the conversation and ultimately, part of the solution.
Te German, Swiss, and Hungarian consumer all see unlicensed brands as the ‘leading trusted brands’ in each of their respective markets. Part of the reason for this has been legislative prevarication when implementing laws over a period of the past 20 years. After which, regulators say things like: the majority of the market is channelised based upon taxation return numbers. However, that’s from winning customers who declared that income upon their tax returns - which is a tiny sum compared to the black market figures for turnover.
Governments need to engage with unlicensed brands and they need to engage in dialogue. Of course, this will shock and annoy the licensed local brands in the market, whose view is rightly that illegals should be shut out completely from the market. However, no one is benefitting from this approach. In the US, if an understanding could be brokered that allowed unlicensed brands to partner with US Tribes, for example, the Tribes’ yearly sports betting rights wouldn’t be worth the tiny sums they are today, but up in the millions of dollars for access rights and revenue shares, per year, that States and Tribes had originally predicted.
In Switzerland, unlicenced brands could pay the 10 casinos with online licences to be their official betting partner. Casinos could offer sports betting via Bet365 or Unibet, who’d pay each of the casinos for the rights. Te marketplace becomes competitive, channelised and actually makes money for the operators and generates taxes for the government and community. Te counterargument from the casinos is that sports betting would cannibalise income from their casino customers, but Yield Sec’s data shows that it’s already happening - only without any benefit accruing to the casinos.
CAN PROHIBITION WORK?
Te local brands in Hungary want to fix the issue themselves. Tey understandably have no compassion for a methodology that ‘invites their enemies to the table.’ At the same time, the government is seeking to crack down on enforcement, issuing the SARA notice in August 2023, warning that payment blocking fines will be imposed repeatedly for offenders.
Unfortunately, it’s mostly posturing. A familiar pattern plays out when government agencies crack down on payment enforcement, which is
P98. WIRE / PULSE / INSIGHT / REPORTS
predominantly through VISA or MasterCard in a market like Hungary. As soon as you attack that source it immediately switches to aggregators, which effectively removes each payment method from the radar. Government and financial agencies are no longer able to track payments, especially illegal gambling payments conducted through PayPal and other online wallets, which illegals have switched to miscoding transactions with for things as innocuous as “online clothing” or “food delivery” sales. Crackdowns simply lead to the aggregators, and payment service providers behind online wallets, very effectively hiding the transactions, and these payment masking methods are seen by Yield Sec to change frequently, sometimes as much as hourly across marquee events like World Cup and Premier League football matches, to protect revenue to illicit operators.
“Whatever a government wants for their online gambling marketplace, they can have with a Yield Sec-supported view of monitoring, policing and enforcement (MPE). Any government coming to us, desiring a 100% prohibition model for example, our answer is yes, you can absolutely achieve that, so long as you commit to a 24/7, 365 days a year MPE framework,” states Vali. “Knowing that crime is there is one thing. Doing something about it, however, is fundamental. Yield Sec exists to help and support legal stakeholders to move the needle against crime and towards a positive, channelised marketplace.
“Tere’s little point knowing about crime without enforcing against it. Te smallest gap in monitoring or delay in enforcement creates opportunity for crime, and weak enforcement without a constant cadence allows crime to adapt, reform and refill the marketplace, only it moves a little bit further away from where today’s political attention was. Tis marketplace infiltration and theft, as well as the consumer harm and misery it creates, should no longer be about politics: it’s a law enforcement and criminal justice matter because every marketplace is being stolen from. Every day.
“Across every form of online gaming. One unlicensed operator leaving the market in Hungary has made the illegal situation far worse, and not one legal operator has benefited – which means taxation receipts have not increased and funding for responsible gaming and the protection of the vulnerable will remain carried by the legal, licensed entities alone. Tis
is simply unsustainable – what happens when a marketplace is so dominated by crime that you can no longer pay for responsible gaming, period?
“We know there are mega-brands operating without licences throughout Europe: so, start thinking about repatriating them and bringing them onshore, with sliding scale license conditions that allow local brands to compete effectively; taking windfall payments for back taxes, fines and consumer harm settlement; establishing partnership dialogue for “immigrant” brands with local “patriots”; actively avoid the far risk of organised crime infiltration and control; and, moving the needle across your marketplace dynamics so that legal gambling achieves its purpose: replacing and removing illegal gambling.”
AMNESTY NATIONAL
Most European marketplaces are headed towards a 50/50 split between legal and unlicensed/illegal gambling. Yield Sec’s data shows this is trending towards being normal. Whatever social policies have been enforced in the past, from a brick and mortar perspective, trying to export those same models to online has either failed, or is failing. Regulators can’t ignore the preferences of online audience behaviour. “We need to reset the paradigm based on audience and product activity data,” underlines Vali. “Either take the route of excessive enforcement, or let some of the soft criminals, the unlicensed operators come to the table, which increases the pie for everyone. Having a larger legal onshore industry creates a better environment all round: more of that bright white cap of the iceberg above the waterline, visible to all and casting light into the darkness around it, giving crime less opportunity to hide and create harm.”
Bet365 represented two-thirds of the Hungarian market with legals failing to occupy 10 per cent of the space. Vali argues for allowing Bet365 to work with the licensed operators, to make them street legal. “Tere are the brands that are just under the waterline,” he says. “What you don’t want is for the legacy brands in Hungary like Bet365 to leave, creating a vacuum that’s been filled with market infiltrators, who are basically trying to make out they’re a part of the gaming industry, when in fact they’re simply criminals.
“When we launched Yield Sec it was the year of the World Cup, and we were able to look at the volume of illegal gambling during that period, which was immense. Tis year there is no pause in the football calendar. Te 2023/24 football season ends, the European Championships start, then it’s the Olympics and the 2024/25 season kicks off. Tere is no natural pause in punting across in 2024, and this can lead to unbelievable gambling harm and addiction problems wrought by the illegals if we don’t start to practically get to grips with the dark side, now.”
The 2023/24 football season ends, the European Championships start, then it’s the Olympics and the 2024/25 season kicks off. There is no natural pause in punting across in 2024, and this can lead to unbelievable gambling harm and addiction problems wrought by the illegals if we don’t start to get to grips with the dark side, now.”
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