Whether we like it or not, the number of illegal participants in the online gambling space continues to rise, and combating them is becoming increasingly complex. Unfortunately, this is the downside of rapid technological advancement, which is leveraged by both legal and illegal gambling operators. The latter, however, enjoy a significant advantage: they are not constrained by regulatory requirements such as software compliance, equipment certification, or oversight, making it easier for them to operate in the shadows.

Moreover, this trend has a negative impact not only on relatively young gambling markets, including Ukraine, but also on Western ones. For example, in the US, the shadow sector consumes 74% of the online gambling market. According to a report by the Campaign for Fairer Gambling and Yield Sec, in 2024, illegal online casinos earned three times more than licensed ones. Potential losses from this include hundreds of millions of dollars in unpaid licence fees and taxes, as well as millions of players who lost their personal data and funds, had problems with payouts, etc.

In the United Kingdom, the Betting and Gaming Council (BGC) reports that about 1.5 million people use the services of shadow gambling organisers in the betting segment every day. According to their estimates, up to £4.3 billion passes through illegal platforms every year, which are not controlled by the state in any way.

However, it is not only technology that facilitates the expansion of illegal gambling and makes it easier for these operators to reach players. Many users are also drawn to illegal platforms due to other factors that make them appear more "attractive"—at least at first glance.

1.No taxes or regulatory obligations

Illegal operators avoid paying taxes and licensing fees, allowing them to offer seemingly more generous terms to players. For example, they often promise higher payouts than licensed casinos, since they don’t need to “tax” player winnings. This makes illegal platforms appear more appealing.

However, in reality, these sites often impose hidden fees on withdrawals, delay payments, or refuse to pay out entirely. And because they operate outside of regulatory oversight, players have no legal recourse. You can’t file a complaint with a regulator if your winnings are withheld or an unexplained “commission” is deducted—because you chose to play on an unlicensed platform.

2.No identity verification

Illegal platforms typically do not require players to verify their identities. As a result, users can remain anonymous to regulatory and tax authorities and avoid explaining the source of their gambling funds.

While this may seem like a benefit, it’s actually one of the key drivers of the growing gambling addiction problem. Anonymity makes it easier for vulnerable individuals to hide their behavior and harder for authorities or loved ones to intervene in time.

3. Lack of effective enforcement

No matter how well-crafted regulatory legislation may be, it must be supported by a robust and technologically advanced law enforcement system capable of combating illegal operators. This effort must go beyond formalities—it should lead to serious consequences for those involved in illegal gambling, including heavy fines, business closures, licence revocations, and sanctions against individuals who own or manage such operations.

The fight against illegal gambling must strike a balance between punitive measures—such as restrictions and penalties—and economic incentives that make legal gambling platforms more appealing to players. Overemphasizing regulation while neglecting the economic realities of the industry, or failing to support legitimate operators, often results in the expansion of the shadow market.

These principles apply across all jurisdictions, and the Ukrainian gambling market is no exception.