Fighting Illegal iGaming Traffic: Global Lessons, Regulatory Tools and the Path Forward

Key findings

•       Scale. According to Gaming Compliance International, almost $6 trillion was wagered through illegal online gambling in 2025, representing betting turnover rather than operators’ profits.

•       Regulatory Effectiveness. No single enforcement mechanism is sufficient. Effective regulation requires coordinated legal, technical, financial and market-based measures.

•       European Markets. The UK reports 97.6% channelisation, while alternative estimates indicate growing illegal activity. Italy has blocked 11,481 illegal domains, Spain retains approximately 86% of gambling expenditure within its legal market, and Germany faces significant differences in channelisation estimates (40–77%).

•       Asia and Brazil. Enforcement outcomes vary considerably: the Philippines reported a 93% quarterly decline in illegal online gambling, while restrictions in India and Japan highlight challenges associated with offshore operators. Brazil continues developing its enforcement framework.

•       Enforcement Priorities. Effective strategies combine network and payment blocking, market intelligence, advertising and affiliate controls, and competitive conditions for licensed operators. These measures also address risks involving player protection, tax losses and financial crime.

Illegal online gambling has become a global challenge with implications that extend far beyond the gambling industry. According to Gaming Compliance International, almost $6 trillion flowed through illegal online gambling in 2025. This figure represents the amount of money people placed in bets, rather than the profits of illegal operators. The scale of this activity illustrates why illegal gambling is increasingly a concern for governments, regulators and other public authorities.

The consequences are not limited to lost tax revenue. Illegal gambling can weaken player protection, create unfair competition for licensed businesses and, in some markets, become connected to money laundering, human trafficking and organised crime.

The experiences of countries across Europe, Asia and Latin America show that there is no single tool capable of solving the problem. Effective enforcement requires a combination of legal, technical, financial and market-based measures, supported by cooperation between regulators, governments and the licensed industry.

Why illegal iGaming matters to governments

Illegal iGaming traffic generally consists of two interconnected elements: players accessing unlicensed offshore websites and traffic generated through illegal affiliates, including websites, social media and Telegram channels that direct users to those platforms.

There are four major reasons why this matters to governments.

The first is lost tax revenue. Money spent with offshore operators does not contribute to the tax base of the country in which the player is located. In the United Kingdom, for example, the illegal market reached £379 million in the first half of 2025 alone.

The second concern is player protection. Licensed operators are required to comply with age-verification, anti-money-laundering and self-exclusion requirements. Illegal operators do not operate under the same obligations, leaving players, including vulnerable and underage users, without the same safeguards.

The third is unfair competition. Offshore operators that do not pay local taxes or comply with regulatory requirements can offer more attractive bonuses or odds than licensed businesses. This places legal operators, which pay taxes and create local employment, at a structural disadvantage. Over time, this can weaken the regulated market.

The fourth is the potential connection between illegal gambling and crime. In Southeast Asia, illegal online casinos have become associated with cybercrime and modern slavery, demonstrating that illegal gambling can develop into a broader security issue rather than remaining solely an economic or regulatory concern.

For governments, therefore, fighting illegal gambling is not simply about protecting the licensed gambling industry. It is also about protecting tax revenues, public health, fair competition and national security.

Europe: four countries, four different approaches

European markets demonstrate how different regulatory approaches can produce different outcomes.

United Kingdom: even strong regulation can lose ground

The United Kingdom has one of the highest levels of channelisation in the world. The UK regulator reports a channelisation rate of 97.6%, meaning that almost 98 out of every 100 pounds spent on gambling in Britain goes to licensed operators.

However, the UK experience also demonstrates that even a highly developed regulatory system can face pressure from the illegal market.

Market data companies estimate that the illegal market increased from 0.43% in 2020 to 9% in 2025. Approximately 84% of illegal traffic is now associated with websites promoted as alternatives for players who are “not on Gamstop”. The example suggests that measures designed to strengthen player protection can sometimes have unintended consequences if affected players turn to offshore alternatives.

An important methodological point is that the 97.6% figure comes from the regulator, while market data companies estimate the legal market at approximately 92%. These figures are based on different methodologies, but both point to the same broader trend.

The lesson from the UK is that even strong regulatory systems can lose ground if new restrictions push players away from the legal market faster than authorities can address illegal alternatives.

Italy: blocking and financial controls

Italy has taken a direct approach to illegal gambling websites by blocking them at the internet-provider level.

By September 2025, 11,481 illegal domains had been blocked. Italian banks are also legally required to refuse payments to unlicensed operators, with fines of up to €1 million for violations.

Legal online operators generate about €4.6 billion a year. Illegal operators take an estimated €18–25 billion in bets, equivalent to about €1–1.75 billion of GGR. At illegal GGR of about €1 billion this implies a legal share of roughly 82–83%; at the upper estimate of €1.75 billion the legal share would be about 72%.

The Italian example suggests that consistent blocking combined with meaningful financial enforcement can significantly reduce illegal gambling, although it does not eliminate it.

Spain: a multi-layered approach

Spain combines several enforcement mechanisms: strict licensing, a public list of illegal websites, internet-provider blocking, payment blocking by banks and continuous market monitoring.

Licensed operators generated approximately €1.7 billion in 2025, while the illegal market was estimated at around €277 million (GCA calculation). The latter represented approximately 16% of the legal market, meaning that around 86% of the money remained within the legal market.

At the same time, an EY study found that 23% of Spanish players had used an illegal website at least once, while almost half of those users did not know that the website was illegal. This illustrates that a strong channelisation rate does not necessarily mean that illegal gambling has disappeared from the market.

The broader lesson from Spain is the value of combining several layers of enforcement rather than relying on a single measure.

Germany: regulation needs a solid legal foundation

Germany provides a different lesson.

The German regulator began with a strong plan in 2023, but in March 2025 a federal court ruled that IP blocking through internet providers was not legal under German law. This effectively removed one of the regulator’s main enforcement tools.

Authorities subsequently moved towards so-called host-based blocking, working directly with web-hosting companies. This approach works but is slower and less effective.

The available channelisation estimates also differ. Industry figures put channelisation at only 40–60%, while a study by the German regulator puts it at 77%. Both figures are lower than the levels cited for Italy and Spain.

The lesson is clear: technical solutions need a solid legal foundation. Without legislation that supports the regulator’s actions, even technically effective enforcement mechanisms can be challenged or rendered ineffective.

Asia: when illegal gambling becomes a wider social and security issue

The Asian experience demonstrates the potential consequences when illegal or grey gambling markets become deeply established.

Philippines: the security and human-rights dimension

For many years, the Philippines hosted Philippine Offshore Gaming Operators, or POGOs. These companies were based in the Philippines but primarily served players in other countries.

At their peak, POGOs generated more than 11% of the country’s gambling regulator income. However, the sector also became associated with human trafficking, forced labour and large-scale money laundering. Some centres were reportedly used to force workers from across Asia to conduct online scams.

In November 2024, President Marcos signed an order banning all POGOs, and in October 2025 the parliament made the ban permanent. Enforcement nevertheless continued, including police operations against trafficking routes. A former mayor received a life sentence for trafficking.

At the same time, illegal online gambling in the Philippines fell by 93% in the third quarter of 2025 compared with the previous quarter.

The Philippine example demonstrates how illegal or grey gambling can evolve into a security and human-rights problem when it becomes sufficiently large. The cost of addressing such a problem can extend far beyond the original regulatory issue.

India: the prohibition trap

India provides an example of the risks associated with complete prohibition.

In August 2025, India enacted a complete ban on online real-money games, with the stated objective of addressing gambling addiction and financial losses. Domestic platforms were forced to close, but the demand for online gambling did not disappear. Instead, Indian players moved towards offshore platforms operating outside the government’s jurisdiction.

This creates what can be described as a prohibition trap: when legal options are removed without effectively addressing illegal alternatives, demand can move to markets where authorities have less control.

The result can be lost tax revenue and weaker player protection rather than the elimination of gambling demand.

Japan: strong law, limited enforcement tools

Japan illustrates a different problem.

Online gambling is illegal under Japan’s criminal code, but the enforcement tools available to authorities are limited. In 2024, Japanese citizens placed approximately $41 billion in bets on overseas sports gambling websites.

Japan does not have a system for blocking illegal gambling websites at the internet-provider level, and lawyers in Tokyo have pointed to the absence of a legal framework for directly blocking such sites.

The lesson is that declaring an activity illegal is not enough. Effective enforcement requires both a legal framework and practical technical tools.

Brazil: enforcement must be built alongside regulation

Brazil offers a different and more recent example.

The country launched its regulated online gambling market on 1 January 2025. Before regulation, approximately 20 million Brazilians were estimated to be gambling online with unregulated operators.

In 2025, the regulator issued 68 licences and gave the telecommunications regulator authority to block illegal websites. Brazilian banks were also required to block payments to unlicensed operators.

During the first half of 2025, the regulator opened 66 supervisory cases involving 93 operators, with sanctions applied in 35 cases.

In December 2025, Brazil also approved legislation targeting the wider illegal gambling ecosystem, including not only operators but also payment processors, affiliates and other participants that facilitate illegal gambling.

The key lesson is that enforcement should be developed at the same time as a regulated market. If authorities build regulation first and enforcement later, illegal operators may retain the players that the regulated system is intended to attract.

Five layers of enforcement

The examples from different jurisdictions point towards a multi-layered approach. No single tool is sufficient on its own.

1. Network blocking

The first layer is blocking illegal websites through internet providers.

DNS blocking is one of the simplest methods: an internet provider identifies a request for an illegal website and prevents the connection. It can be effective against ordinary users but is less effective against people using VPNs.

A more advanced approach is Deep Packet Inspection, or DPI, which can identify gambling-related traffic and can also be used to block VPN traffic. Major vendors in this area include Sandvine, Allot, Cisco, Palo Alto and Fortinet. DPI is more expensive, but is a more powerful technical tool.

2. Financial blocking

The second layer is financial enforcement.

Gambling transactions made by card use the MCC 7995 merchant category code. Regulators can provide banks with lists of licensed operators so that transactions using this code that are not connected to licensed operators can be blocked.

This model is used by countries including Italy, Spain and Brazil.

Mastercard and Visa also operate programmes to identify operators attempting to conceal their gambling activity through other merchant categories.

However, blocking MCC 7995 alone is not sufficient. Illegal operators can use other businesses, merchant accounts or incorrect codes to disguise gambling payments. Regular monitoring of transactions is therefore necessary to identify suspicious activity and possible miscoding.

3. Market intelligence

The third layer is market intelligence.

The principle is simple: regulators cannot effectively fight a market they cannot see.

Yield Sec is an example of a platform that uses artificial intelligence and machine learning to map legal and illegal gambling activity, including operators, affiliates, content and payment flows.

Other tools include Blask, GeoComply and BrandShield. For smaller jurisdictions, open-source intelligence methods can also provide useful market information at lower cost.

4. Affiliate and advertising control

The fourth layer concerns affiliates and advertising.

Players often discover illegal gambling websites through comparison websites, social media, Telegram channels and YouTube streams rather than directly searching for an offshore operator.

Controlling these channels can therefore address one of the main routes through which illegal operators acquire customers.

Advertising platforms and app stores are also important parts of this ecosystem. Google Ads and Meta Ads can require licence verification for gambling advertising, while Apple and Google Play can remove illegal gambling applications when requested by regulators.

5. Economic measures and channelisation

The fifth layer is the competitiveness of the legal market itself.

A legal market must be attractive enough for players to choose it over illegal alternatives.

If taxes are too high, licensed operators may struggle to offer competitive bonuses. If regulations are excessively restrictive, players may seek easier alternatives offshore.

The objective should therefore be to create a legal market that is the best market for players, rather than simply the only legal market.

This is why channelisation is such an important metric. It measures the share of gambling activity taking place within the legal market and can help regulators understand whether their policies are keeping players within the regulated system.

Common regulatory mistakes

Several recurring mistakes can undermine efforts to combat illegal gambling.

The first is tightening restrictions on legal operators without addressing illegal operators at the same time. Additional requirements may weaken licensed businesses while offshore operators remain unaffected. In this situation, the intended goal of stronger player protection can actually become harder to achieve. Germany and the United Kingdom are examples of this challenge.

The second is total prohibition. The experience highlighted in India suggests that banning legal gambling does not necessarily eliminate demand. Instead, demand may move to offshore markets where authorities have less ability to enforce player-protection and financial controls.

The third is building technical blocking systems without an adequate legal framework. Germany demonstrates the consequences of implementing technical measures that are subsequently challenged under national law. The legal foundation needs to support the tools being used by regulators.

The fourth is focusing only on operators. Illegal gambling is an ecosystem involving websites, affiliates, payment processors, advertising platforms and social media channels. Blocking websites alone may not be enough if the wider ecosystem remains operational.

The fifth is trying to fight illegal gambling alone. International cooperation is essential, including cooperation with other regulators, card networks, technology providers and licensed operators. Licensed businesses can possess market data and practical knowledge that regulators may not have, making cooperation particularly valuable.

What governments should

There are five practical priorities for governments.

First, measure channelisation. Regulators need to understand how much gambling activity takes place within the legal market. Without measuring the situation, it is difficult to manage it effectively.

Second, build a multi-layer blocking system. Network blocking should be combined with payment controls, affiliate enforcement and other measures rather than treated as a standalone solution.

Third, ensure that the legal framework supports enforcement tools. The law must give regulators the authority to use the technical and financial mechanisms they are expected to deploy.

Fourth, cooperate with licensed operators. Licensed businesses should not be treated simply as subjects of regulation. They pay taxes, follow regulatory requirements and possess valuable market data. Cooperation can therefore make enforcement more effective.

Fifth, learn from international experience. Spain, Italy and Brazil provide examples of approaches that have produced strong results, while Germany and India illustrate the risks and limitations that governments should consider when developing policy.

The way forward

The scale of illegal online gambling demonstrates that the issue cannot be addressed through one measure or by one institution alone.

The nearly $6 trillion figure cited for 2025 represents the amount people bet outside regulated systems. Behind that number are lost tax revenues, reduced player protection, challenges for licensed businesses and, in the most serious cases, links to organised crime and human exploitation.

At the same time, international experience shows that effective tools already exist. Spain and Italy demonstrate the potential of combining blocking, payment controls and market monitoring. Germany shows why enforcement needs a strong legal foundation. India illustrates the risks of prohibition without effective control of offshore demand. Brazil demonstrates the importance of building enforcement alongside a newly regulated market.

Ultimately, fighting illegal gambling requires a combination of policy, law, technology and cooperation.

A regulated market must be sufficiently competitive to keep players within the legal system, while regulators need the legal authority, technical tools, financial controls and market intelligence required to enforce the rules.

For the licensed industry, cooperation with governments and regulators is also essential. A properly regulated and supported licensed market can be one of the strongest tools against illegal gambling: every customer who remains within the legal market represents one less customer for the offshore sector, while every transaction conducted legally contributes to a safer market, public revenues and stronger regulatory oversight.

Conclusions

International experience leads to the following conclusions. No single measure or institution can address illegal online gambling. Technical solutions need a solid legal foundation. Prohibition without effective control of offshore demand can move players to offshore platforms. Enforcement should be built alongside a newly regulated market. The legal market must be the best market for players, rather than simply the only legal market.

Sources and basis

This review draws on official publications of regulators and government bodies (UK Gambling Commission, ADM, DGOJ, GGL, Ministry of Finance of Brazil), national legislation, Eurostat, the UNODC Global Report on Trafficking in Persons 2024, card-network rules, the Gaming Compliance International report Online Gaming 2025: Global, and GCA analysis and calculations.

GCA provides regulatory analysis, market-entry strategy and expert assessments for governments, regulators and operators. Contact: gcauthority.com