The gambling industry is expanding rapidly, attracting millions of players worldwide. However, alongside licensed platforms, a shadow market is also flourishing, offering unregulated gambling without official oversight or player protection.
In the digital age, illegal operators exploit technical loopholes, integrate with local payment systems, and use aggressive marketing strategies, making them highly competitive with licensed platforms.
Today, unlicensed online casinos generate massive revenues, while many players remain unaware of the risks involved. Some operators find ways to open online casinos without licenses, exploiting legal gaps. Even in highly developed jurisdictions like Sweden and Japan, authorities struggle to implement effective control measures.
Sweden: Regulatory Loopholes and Budget Losses
According to ATG’s report, Sweden’s channelization rate (the percentage of bets placed within the licensed gambling sector) stood at 69–82% in Q4 2024, significantly below the 90% target set by the government. This means a substantial portion of the market still operates illegally.
ATG’s analysis found that 17 out of the 20 largest illegal platforms use the same technology as licensed operators. Furthermore:
- Six platforms process payments through Swedish banks using BankID.
- Two sites are on the Swedish Gambling Authority’s blacklist.
This highlights serious regulatory gaps.
ATG’s CEO, Hasse Lord Skarplöth, noted that the revenue from the unlicensed market is comparable to the entire national budget for primary education. Sweden’s National Audit Office has criticized regulatory bodies for insufficient oversight, revealing that since the 2019 gambling reform, traffic to illegal sites has increased tenfold, with an annual turnover of SEK 150 billion ($14.7 billion).
Japan: Celebrity Influence and Rising Player Debt
A similar situation exists in Japan, where online gambling is officially prohibited. However, a study by the National Police Agency revealed that:
- Over 3 million Japanese citizens (3.5% of the population) engage in online gambling.
- Players spend JPY 1.24 trillion ($8.4 billion) annually on unlicensed platforms.
The most concerning issues include:
- 60% of players admitted to signs of gambling addiction.
- 46% reported accumulating debts.
- 43.5% of the population is unaware that online gambling is illegal.
A key factor driving unlicensed gambling is celebrity endorsements.
- 23% of players started gambling due to promotions by sports stars and entertainment figures.
- Recently, Japanese authorities tightened enforcement, penalizing public figures involved in illegal betting.
- Olympic table tennis player Koki Niwa, professional baseball players, and comedians from Yoshimoto Kogyo were fined and publicly apologized for their involvement.
Government Measures: Blocking, Banning, and Financial Oversight
Governments in Sweden and Japan are taking action against the illegal gambling market:
- Sweden is discussing stricter controls on gambling platforms and banking transactions.
- Japan’s Cabinet has launched an anti-gambling addiction strategy, including:
- Blocking payment providers and marketing partners of offshore casinos.
- Banning gambling advertisements.
- Public awareness campaigns to educate citizens about gambling risks.
A critical focus is monitoring companies that offer online casino rental services, as these solutions are often used by unlicensed operators to launch illegal platforms quickly.
Key Takeaways: How to Combat Illegal Gambling?
The cases of Sweden and Japan demonstrate that bans alone are insufficient. Unlicensed operators exploit technological loopholes, while many players remain unaware of the legal restrictions.
A comprehensive approach is required to combat the black market effectively:
- Stronger international cooperation and data-sharing between regulators.
- Blocking financial transactions processed through banks and payment systems.
- Strict penalties for advertisers and platforms promoting unlicensed gambling.
- Enhanced oversight of the process of registering online casinos, preventing the use of fraudulent data.
Without a systematic response, the illegal gambling market will continue to grow, posing risks to the global economy and player safety.