Europe’s Illegal Gambling Market Is Becoming a Tax, Consumer Protection and AML Problem

Europe’s illegal online gambling market is no longer a side issue for regulators. New figures presented at the European Parliament suggest that unlicensed operators targeting EU consumers generated €91.6 billion in activity in 2025, costing Member States an estimated €22.9 billion in lost tax revenue.

The figures, revealed during a European Casino Association roundtable on illegal online gambling, show a market that is growing faster than enforcement systems can contain it.

The estimate represents a rise of around 14% from the previous €80 billion-plus figure used for 2024, underlining how quickly unlicensed platforms are expanding across the EU.

For years, illegal gambling has often been discussed mainly as a consumer protection issue.

That is still true. Unlicensed operators can reach vulnerable users, offer misleading bonuses, avoid responsible gambling tools and ignore self-exclusion systems. But the scale now points to something wider: illegal online gambling is also becoming a tax problem, a regulatory arbitrage problem and a financial crime problem.

The Scale Has Become Too Large to Ignore

The new estimate places the illegal EU online gambling market at €91.6 billion in 2025. That is not a marginal offshore market. It is a parallel gambling economy operating beside the regulated sector, but without equivalent licensing costs, tax obligations, consumer safeguards or anti-money laundering controls.

The European Casino Association’s earlier 2024 report, based on Yield Sec analysis, estimated illegal online gambling in the EU at €80.6 billion in gross gaming revenue. It also estimated that illegal operators accounted for 71% of the EU online gambling market, compared with €33.6 billion for the legal market.

If the 2025 estimate is correct, the problem has deteriorated further. The tax loss alone is estimated at €22.9 billion, up from more than €20 billion in the 2024 analysis. That is money not reaching national budgets, public services or regulated economies. It is also revenue being diverted away from licensed operators that are subject to taxes, compliance obligations and responsible gambling standards.

This is why the debate is changing. The question is no longer whether illegal gambling exists. The question is whether Europe’s fragmented national enforcement model can deal with an illegal market that operates cross-border by design.

Why Illegal Operators Have an Advantage

Unlicensed operators often compete on terms that regulated operators cannot match.

They can offer larger bonuses, fewer affordability checks, weaker identity controls, higher-risk payment options and fewer restrictions on marketing. They do not need to fund responsible gambling tools, comply with national licensing conditions, maintain domestic reporting obligations or pay local gambling taxes.

For some players, that makes illegal platforms more attractive. For high-risk players, including self-excluded customers, underage users or individuals seeking to avoid checks, the attraction can be even stronger.

This creates a structural imbalance. Licensed operators operate inside national frameworks.

Illegal operators target the same consumers from outside those frameworks. They benefit from the demand created by regulated markets while avoiding the obligations attached to those markets.

The result is not normal competition. It is regulatory arbitrage.

The Consumer Protection Risk

The most immediate risk is to players.

Licensed gambling operators in Europe are generally required to apply responsible gambling measures, age verification, customer due diligence, self-exclusion tools, advertising restrictions and intervention procedures. These controls are not perfect, but they create a framework for consumer protection.

Illegal operators sit outside that framework. They may advertise fake bonuses, use misleading licensing claims, disguise gambling products as games or target users through social media and affiliate channels. EGBA has warned that fraudsters are exploiting consumer trust in the licensed gambling environment through fake websites, fraudulent apps, phishing campaigns and platforms that falsely claim to hold EU licences.

The danger is that consumers may not always know they are dealing with an illegal operator.

A website can copy the branding of a legitimate casino, claim to be licensed in a recognised jurisdiction, or use familiar payment methods and advertising channels to appear credible.

Once a player deposits money, the protections available in a regulated environment may disappear. There may be no effective complaint process, no responsible gambling intervention, no guarantee of fair play, and no reliable enforcement route if winnings are withheld.

The AML Problem Behind the Market

Illegal gambling platforms can be used to move, disguise or layer funds. They may accept anonymous or weakly verified payments, allow rapid deposits and withdrawals, operate through offshore structures, use crypto-assets or payment intermediaries, and avoid suspicious transaction reporting obligations.

In a regulated environment, gambling operators are expected to identify customers, monitor transactions, assess risk, report suspicious activity and apply enhanced controls where needed. Illegal operators do not operate under the same discipline.

That creates a gap for money launderers. Gambling platforms can be attractive because they provide a commercial explanation for funds moving in and out of accounts. A criminal may seek to deposit illicit funds, create the appearance of gambling activity, and withdraw funds as supposed gambling proceeds. Even where the gambling activity is limited or artificial, the transaction history can be used to create a false narrative around the source of funds.

The risk increases when platforms offer crypto payments, high transaction velocity, cross-border accounts or weak identity checks. These features can make tracing funds more difficult and reduce the effectiveness of financial intelligence.

The illegal gambling market therefore matters not only to gaming regulators. It matters to FIUs, tax authorities, payment institutions, banks, law enforcement and AML supervisors.

A Tax Problem at EU Level

The estimated €22.9 billion tax loss comes at a time when EU governments are under pressure to fund defence, industrial policy, digital infrastructure, climate investment and broader public spending commitments. It also comes as the European Commission has explored potential new own resources for the EU budget, including a possible levy on online gambling.

Euronews reported in May 2026 that the Commission estimated a 3% levy on the net turnover of the online gambling sector could generate around €1.9 billion per year on average for the 2028–2034 period. But the Commission also noted that gambling is not harmonised across the EU, with no common definition or tax approach across Member States.

That fragmentation is exactly what makes illegal gambling difficult to tackle. National regulators may be responsible for licensing and enforcement, but illegal operators can target consumers across borders, shift domains, change payment routes and use digital marketing channels to reappear after takedowns.

If Europe is considering gambling as a revenue source, it must also confront the fact that a significant part of the market may already be leaking into unlicensed channels.

Fragmentation Is the Weak Point

Europe’s gambling regulation remains largely national. Each Member State has its own licensing model, tax regime, advertising rules, enforcement powers and regulatory priorities.

That makes sense politically, because gambling policy is sensitive and often tied to national consumer protection choices. But it creates practical enforcement problems in a digital market.

Illegal operators do not respect national borders. A website can be hosted outside the EU, advertised through social media, promoted by affiliates, accessed through mirror domains and paid through third-party processors. By the time one authority blocks a domain or takes action against a payment route, another route may already be operating.

This is why industry groups are increasingly calling for more coordinated EU-level action.

The ECA has argued for stronger cooperation between national enforcement authorities, financial intelligence units, the European Commission, Europol and AMLA. EGBA has also argued that fragmented national approaches are not enough to deal with online fraud linked to illegal gambling.

The point is not necessarily that the EU needs a single gambling regulator. The more realistic issue is operational coordination: faster data sharing, coordinated domain blocking, payment disruption, advertising enforcement, affiliate monitoring and action against repeat offenders.

The Role of Advertising and Illegal Streaming

One reason illegal gambling spreads so quickly is that it can piggyback on the wider illegal digital economy.

The UK provides a useful warning. A Campaign for Fairer Gambling report cited by The Guardian found that illegal sports streams had more than doubled to 3.6 billion over three years, while 89% of illegal streams featured adverts for black-market bookmakers. The same report estimated that unlicensed operators earned £379 million in the first half of 2025, giving them 9% of Britain’s online gambling market.

The UK is outside the EU, but the pattern is relevant. Illegal sports streaming can become a gateway into unlicensed betting. Users searching for free sports content are exposed to black-market gambling ads, often without knowing whether the operators are licensed or safe.

This creates a wider enforcement challenge. Tackling illegal gambling is not only about gambling websites. It is also about advertising networks, affiliate marketing, social media platforms, illegal streaming sites, search engines, payment processors and app stores.

That is why the problem is difficult to contain. Illegal gambling survives because it is embedded in a broader ecosystem of digital fraud, piracy and cross-border payments.

What Regulators Should Focus On

The first priority should be payment disruption. Illegal operators need money flows. If regulators, banks, payment institutions and card schemes can identify and block payment channels used by unlicensed operators, they can make the business model less viable.

The second priority is advertising and affiliate enforcement. Illegal operators rely heavily on visibility. Search engines, social media platforms, streaming sites and affiliates can all be used to direct consumers toward unlicensed brands. Regulators need faster takedown mechanisms and stronger accountability for repeat promotion of illegal operators.

The third priority is intelligence sharing. National regulators often see only part of the picture.

A platform targeting consumers in France may also be targeting players in Germany, the Netherlands, Spain and Cyprus. Without cross-border intelligence, enforcement remains fragmented.

The fourth priority is consumer awareness. Many players do not understand the difference between licensed, offshore and illegal gambling platforms. Public-facing tools that allow users to verify licences quickly can reduce the effectiveness of fake licensing claims.

Finally, AML authorities should treat illegal gambling as a financial crime typology, not only a regulatory breach. If unlicensed platforms are moving large volumes of funds outside supervision, the risk is not merely that taxes are unpaid. The risk is that criminal proceeds may be entering, moving through and exiting the gambling ecosystem with limited visibility.

The Bigger Picture

Even if estimates differ between industry sources, the direction is clear: illegal online gambling in Europe is large, growing and increasingly difficult to manage through national enforcement alone. It threatens licensed operators, reduces tax revenue, exposes consumers to harm and creates financial crime vulnerabilities.

The regulated gambling sector is often criticised for social harm, advertising pressure and affordability concerns. Those debates remain valid. But they should not obscure the fact that pushing players into unlicensed markets can make the problem worse. Illegal operators do not apply responsible gambling controls, do not pay taxes, do not submit to supervision and do not report suspicious activity.

Europe therefore faces a difficult balance. Regulators must keep tightening consumer protection and AML standards in the licensed sector, while ensuring that regulation does not unintentionally push demand toward illegal platforms.

The illegal market is already too large to dismiss as a side effect. It is becoming a parallel financial ecosystem. If Europe wants a safer gambling market, it will need to treat illegal gambling as a cross-border enforcement, tax, consumer protection and AML priority at the same time.

By fLEXI tEAM