The Black Market Persists

Bettors use black market gambling sites for a variety of reasons. Some are nudged, some are pushed, some choose them willingly, and others have no choice.

The black market has become a bogeyman to which the regulated sports betting industry can point. Lawmakers, regulators, and the public are constantly warned about its presence, the harm it causes, and the siren song it uses to lure bettors offshore.

- Don’t set the tax rate too high, or the black market will come and get you.

- Don’t prohibit in-state college betting or props, or the black market will come and get you.

- Don’t limit market access, or the black market will come and get you.

- Don’t restrict advertisements or promotions, or the black market will come and get you.

Sharp bettors will also reference the black market bogeyman, “Don’t set your lines too high, or the black market will come and get us!”

Every unfriendly-to-the-industry decision is framed as pushing people into the arms of illegal bookmakers, as is every unfriendly-to-sharp-bettor policy.

Don’t get me wrong, the black market is a huge problem, and licensed operators shouldn’t be handcuffed by overzealous legislation and regulation and unable to compete against the black market. At the same time, there is a simple truth the industry needs to come to grips with: The black market isn’t going anywhere.

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Why People Choose the Black Market

I’ve been writing about the appeal of the black market and why bettors use corner bookies or offshore sites for years and have settled on the following core reasons:

1. There are no legal options available.

2. Less overhead equals better odds and promotions.

3. There is less friction during the registration process.

4. They offer prohibited markets - political, entertainment, etc.

5. Credit betting.

6. More anonymity – more opaque financial transactions and no tax forms.

7. Bettors are less likely to be limited/banned.

A quick perusal of the above list shows a mixture of underlying reasons ranging from it’s the only game in town to I need to hide my identity and/or source of funds to I’m a sharp bettor looking for the best odds.

I would separate these bettors into four groups:

• Bettors with no other option

• Bettors who deliberately choose offshore

• Bettors that have been pushed offshore

• Bettors who have been nudged offshore

Now, the real questions are: What, if anything, can the legal market do to appeal to each of these groups? More importantly, are these the customers the legal market should be courting?