A recent report put forward by Gaming Compliance International (GCI) suggests that the size of the global black market has hit a staggering $5.9tn value, effectively turning the sector into the world’s third-largest economy if this number were applied to gross domestic products of countries.
Illegal gambling is now the world's "third-largest" economy
The authors explained that the $5.9tn applied to the total handle placed with unlicensed websites across all applicable categories, including sports betting, online casino, poker, lottery products, and crypto gambling. The GCI noted that there has been a sustained increase in the total handle going to the black market, with the handle growing from $5.1tn previously in 2023 to $5.7tn in 2024, and hitting $5.9tn in the organization’s most recent report. More importantly, the CGI has split the existing market into three separate categories, referring to them as regulated, unregulated, and unacknowledged. The third category, the unacknowledged market, refers to a variety of products such as social and sweepstakes casinos, fake financial products, skin betting and trading, TikTok contests, and, expectedly, prediction markets, which the CGI has decided to also include in this categorization. CGI President Ismail Vali argued that this categorization was now available across every market globally, with each country experiencing its regulated, unregulated, and unacknowledged market. It was this third category, Vali added, that fueled consumer confusion, but also accelerated unregulated growth, and regulatory complexity at scale. In a world where you can bet on anything, consumers are increasingly betting on everything. This is the gamification of everything, he added further. The CGI has also taken a look at the newly emerged and fast-expanding phenomenon of prediction markets.
Player confusion contributes to the growth of the black market
Vali notes that these products are classified as finance in the United States and regulated under the Commodity Futures Trading Commission’s mandate in the country, but they are deemed a form of illegal gambling outside the country, creating an interesting conflict. Prediction markets first emerged in the 2010s, with the platforms garnering momentum over the past few years, and notably under Kalshi’s targeted push into the US market, with a strong focus on political betting at first, but then quickly moving into event sports betting, which has led to a litany of regulatory and legal pushback. The CGI estimates that around $3.1bn was traded through prediction markets around the time of the Super Bowl this year, and supporting events. Importantly, as noted by the CGI CEO Matt Holt, the scale of the unregulated online gambling sector is a figure that can no longer be ignored. At $5.9 trillion in wagering value, this is one of the largest economic systems in the world. What this report makes clear is that regulators are not facing a marginal challenge, but a dominant one. The majority of activity is occurring beyond the regulated perimeter, Holt added. These findings are not exactly surprising, as the Betting and Gaming Council (BGC) has recently noted that illegal gambling has been expanding significantly, in the United Kingdom, securing an ever-greater share of the market.
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