In regulated gambling and sports betting, policymakers constantly talk about channelisation, player protection, and tax efficiency. Yet all of these goals rely on one basic requirement: understanding how large the black market actually is. Without a shared, credible “gold standard” for measuring illegal gambling activity, decision-making becomes fragmented, politicised, and often ineffective. The damage caused by this lack of standardisation reaches far beyond statistics—it shapes laws, markets, and player outcomes.
What Is Meant by a “Gold Standard” in Measurement
A gold standard is a widely accepted methodology that produces comparable, repeatable, and transparent results across markets. In gambling, this would mean a consistent way to estimate illegal betting volume, player participation, and revenue leakage.
Today, black market estimates are produced using wildly different assumptions, data sources, and definitions. As a result, figures from different studies are often impossible to compare, even within the same country.
Fragmented Data Leads to Conflicting Narratives
One of the most damaging effects of lacking a gold standard is narrative distortion. Regulators, operators, and advocacy groups often cite different numbers to support opposing arguments.
How Methodology Shapes the Outcome
Depending on whether a study relies on self-reported surveys, payment data, traffic analysis, or enforcement reports, the estimated size of the black market can vary by several hundred percent. This creates room for selective interpretation rather than evidence-based policy.
When no methodology is universally trusted, the debate shifts from “what is happening” to “which numbers we prefer.”
Impact on Regulatory Decision-Making
Regulation depends on proportionality. Tax rates, licensing fees, and compliance requirements are supposed to balance consumer protection with market competitiveness. Without accurate black market measurement, that balance breaks down.
Regulators may underestimate illegal activity and assume the market is healthy when it is not. Alternatively, they may overestimate it and introduce overly aggressive measures that push legal operators out.
Both scenarios weaken regulated markets rather than strengthening them.
Consequences for Channelisation Goals
Channelisation—the migration of players from illegal to licensed operators—is a core objective in gambling regulation. Measuring progress requires a reliable baseline.
Why Channelisation Cannot Be Proven Without Standards
If the size of the black market is unknown or inconsistently defined, regulators cannot confidently say whether reforms are working. A reported increase in legal revenue does not necessarily mean illegal activity is shrinking; it may simply reflect market growth.
This uncertainty makes it difficult to justify policy changes, defend regulatory frameworks, or correct failing strategies.
Economic and Fiscal Implications
The black market directly affects tax revenue, employment, and investment. Governments use black market estimates to forecast fiscal impact and justify enforcement budgets.
Inconsistent measurement leads to unreliable forecasts, which can result in:
- misallocated enforcement resources
- unrealistic tax expectations
This undermines public trust and weakens long-term planning for regulated gambling sectors.
Challenges for Operators and Investors
Licensed operators depend on stable, predictable regulation. When black market size is unclear, operators face uncertainty about competitive pressure from illegal platforms.
This affects decisions on market entry, marketing spend, and product development. Investors, meanwhile, struggle to assess regulatory risk when official data lacks consistency or credibility.
Over time, this discourages capital investment in regulated markets, indirectly strengthening unlicensed alternatives.
Player Protection Suffers from Poor Measurement
Black market operators are not bound by responsible gambling rules, AML standards, or consumer safeguards. Understanding how many players use illegal platforms is essential for evaluating harm exposure.
The Risk of False Security
If regulators underestimate black market usage, they may believe player protection is improving when in reality a significant portion of activity occurs outside the regulated system. This creates a false sense of progress while vulnerable players remain unprotected.
Why Creating a Gold Standard Is So Difficult
Measuring illegal activity is inherently complex. Black markets adapt quickly, operate across borders, and deliberately avoid transparency. However, difficulty does not justify fragmentation.
The main obstacles include inconsistent definitions of what counts as “black market,” limited access to payment and ISP data, and political incentives to frame numbers strategically.
Without collaboration between regulators, academics, and industry experts, these barriers persist.
What a Standardised Approach Could Improve
A widely accepted measurement framework would not eliminate uncertainty, but it would narrow the margin of error and improve comparability across jurisdictions.
It would allow regulators to benchmark performance, identify trends, and adjust policy based on evidence rather than assumptions.
For the iGaming and sports betting sectors, this would mean more stable regulation, better player outcomes, and stronger legal markets.
The Bottom Line
The lack of a gold standard to measure the black market is not a technical inconvenience—it is a structural weakness. It distorts policy debates, undermines regulation, and weakens the legal gambling ecosystem.
Until measurement becomes consistent, transparent, and comparable, efforts to fight illegal gambling will remain reactive and inefficient. In a data-driven industry, the absence of reliable data is one of the most damaging risks of all.