Ismail Vali, CEO of Yield Sec, explains how illegal gambling operators across Europe are targeting self-excluded players.
Since Yield Sec’s debut in 2022, we have been at the forefront of discussions about the complicated dynamics of gray, white and black operators in the gambling ecosystem, and a major issue surrounding self-exclusion is emerging.
We specialize in understanding the interplay between the legal and illegal aspects of the gambling industry. This duality dilemma exists in all regulated markets today.
A critical concern that has emerged on our technology, AI, and machine learning radar is what we classify as “VV,” or vulnerability victimization.
Legal, licensed operators are prevented and regulated from enticing children and problem gamblers who have self-excluded themselves from accessing their services to gamble.
We all know cases of violations by legal operators when they communicated with self-excluded players. As a result, they face investigations, fines and reprimands from regulators.
However, from the perspective of monitoring and monitoring platform Yield Sec, these violations by legal operators only scratch the surface. The Yield Sec platform reveals a much broader, largely uncontrolled landscape in which illicit operators strategically exploit vulnerable audiences as a core tenet of their go-to-market strategy.
At the heart of this troubling trend are two crucial metrics: Cost per Acquisition (CPA) and Revenue per Player (RPP). Illegal operators navigate the acquisition landscape by targeting audiences shunned by the legal industry, effectively minimizing their costs.
These operators focus on search terms related to self-exclusion loopholes. They use a powerful tool to offer betting and gaming services to vulnerable audiences on an unprecedented scale.
Therefore, the appeal for illegal operators goes beyond acquisition and aims to maximize revenue per player.
Yield Sec: Repair holes in the safety net
Individuals excluded from legitimate responsible gambling programs find their only opportunity in the illegal industry.
What makes the situation worse is the lack of monitoring, security controls and regulatory processes in these markets. There is little scope to actively identify, recognize, assess and act against the combustible damage that will inevitably occur when the fire of problem gambling meets the gasoline of illegal gambling operators.
Our goal is to provide regulators with the critical safety net to not only monitor but also actively address potential harm. This is because we can see the extent of the problem.
Insight into the Black Mirror: The Dark Reflections of European Gambling
Over the course of 2023, Yield Sec has closely monitored the problem of vulnerability victimization in European benchmark marketplaces and uncovered important insights.
Self-exclusion scheme: Gamstop
Controller: British Gambling Commission
Yield Sec highlighted in January 2023 that illegal gambling operators were actively targeting Gamstop’s audience. While illegal operators make up 2% of the UK market share (according to data from Yield Sec), this number has skyrocketed since 2021.
Yield Sec data shows that the main driver of this growth is the strategic focus on players excluded by Gamstop itself. The illegal companies use a range of channels such as search, ads, apps, websites and partners.
Search terms such as “Not on Gamstop,” “Non Gamstop,” and “Get out of Gamstop” have played a critical role in this growth. This is supported by the shift to consumer voice searches, which creates huge differences in the landscape of terms and targets that need to be monitored and monitored.
Since Yield Sec first discussed this issue in the UK in January 2023, the landscape has changed dramatically. What was once a phenomenon with thousands of Google search engine results pages (SERPs) and numerous affiliates has expanded significantly.
There are now millions of search results, thousands of affiliate partners and hundreds of illegal operators, illustrating the extent and persistence of self-exclusion evasion.
Self-exclusion scheme: Spelpaus
Controller: Spelin inspections
In Sweden, Yield Sec’s platform discovered widespread cases of victimization due to security vulnerabilities across the spectrum of Spelpaus and gambling-related search terms.
Our platform’s AI and machine learning capabilities uniquely enable it to capture audience activity and interaction. This shows that our growth in Sweden is in line with that of the UK.
We have seen notable increases during core seasonal periods. There’s the start of the football season, Black Friday, Cyber Monday, not to mention the popularity of Christmas calendars in betting and gambling across Sweden.
Self-exclusion scheme: ROFUS
Denmark, a mature regulated market, shares similarities with the United Kingdom in terms of the penetration of illegal gambling targeting vulnerable audiences. The illegals in Denmark focus on children and self-excluded gamers, surpassing the UK in terms of the share of the total market infiltrated by illegal operators.
The majority of illegals turn to “workarounds” to ROFUS and KYC regulations for identity and payment security. This creates a market ecosystem that requires constant monitoring and enforcement – a gap that currently exists in Denmark against criminal illegal operators.
Self-exclusion scheme: CRUKS
Controller: Kanspel authority
As a recently regulated market, the Netherlands struggles with the duality between legal, licensed operators and unlicensed, legacy black market businesses.
A current regulatory strategy characterized by high-profile measures and fines against offshore illegals appears to lack clear success in actual enforcement. There is little evidence that fines have actually been paid or that these companies have ceased their activities in the Netherlands.
In these evolving market dynamics, hundreds of illegal operators are exploiting the emerging understanding of legal and illegal realities and attacking self-exclusion systems like CRUKS.
Search terms like “Niet op CRUKS” and “Zonder CRUKS” dominate illegal operator marketing and search engine optimization strategies.
Self-exclusion scheme: oasis
Controller: The Joint Gaming Authority of the States (GGL)
Germany, another recently regulated market, faced a lack of clarity before legalization, which encouraged the growth of a huge spectrum of illegal gambling operators.
Many unlicensed operators remained and are now supported by new illegal providers. For the majority of illegals, targeting the Oasis program’s target groups is a priority. They use a low CPA, high revenue per player “guarantee” for their ads on affiliate, search, and social platforms that target these vulnerable people.
Yield Sec’s ongoing vigil in Europe
Yield Sec’s look at various European marketplaces reveals a worrying trend.
Illegal operators systematically target individuals through self-exclusion programs, ensuring a steady influx of revenue-generating actors.
Whether through performance-based affiliate agreements with lucrative net revenue share rates or through standard upfront marketing contracts, the exploitation of vulnerable people remains a disturbing reality.
Efforts to address this issue must go beyond simply blocking websites or apps or regulatory discussions with media players such as Google. The concept of a “blocklist” or “blacklist” merely captures a historical snapshot of past violations. These do not address the root problem and the need for constant monitoring, surveillance and enforcement.
Eliminate crime from gambling
Think of the dynamics of illegal online gambling as comparable to the illegal drug market. Banning drug dealing on a street corner doesn’t solve the problem; it just moves the problem to new places.
Likewise, in illegal online gambling, the removal of a single target website or app has limited impact on the overall revenue strategy of illegal operators. They use numerous mirrors and redirects for each individual brand.
Every online betting, gambling and lottery location in a marketplace operates like a street corner and requires constant vigilance in the form of monitoring, monitoring and enforcement. This need exists 24 hours a day, 365 days a year.
This is exactly the solution we offer to regulators, exclusion system providers and other legal stakeholders in the gambling ecosystem. We must go beyond the good intentions of our responsible gaming policies. A proactive approach that ensures that the fundamental purpose of legal gambling is achieved – to replace illegal gambling – is crucial.
We want to help all legal actors achieve higher goals and provide active benefits to the commerce and community of every jurisdiction. In this way, revenue, taxes, onshore jobs and control are passed on to the legal stakeholder community as illegal gambling activities are identified, reduced and eliminated.
This will not happen if we allow crime to take hold and thrive in our online gaming ecosystems, while simultaneously harming the most vulnerable people in our society.
Ismail Vali is the founder and CEO of Yield Sec. Yield Sec is the leading marketplace intelligence platform that addresses the diverse needs of legal stakeholders across the global landscape of online betting, gaming and lottery jurisdictions.
Find out more at YieldSec.com