Dutch Regulator Winning Black Market Battle, Reports 85 Percent Channelization Rate

Posted on: October 3, 2022, 03:16h. 

Last updated on: October 5, 2022, 05:41h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.

The Dutch regulated online gambling market has achieved a channelization rate of 85% in its first year, the country’s regulator Kansspelautoriteit (KSA) has announced.

René Jansen
KSA chair René Jansen, seen in a headshot above, said his organization investigated over 200 black market sites in the past 12 months. (Image: KSA)

“Channelization” here refers to the level at which gamblers are engaged with the newly regulated market, as opposed to the black market. The rate of 85%, if accurate, would be a great success for the regulator, which targeted 80% channelization at launch.

Combating the black market is a major priority for a new online gambling jurisdiction. Unburdened by regulations and taxation, black market operators can often offer better odds and promotions than their legal counterparts. That’s why players continue to use them post-regulation.

And despite evidence that gamblers prefer licensed, regulated platforms, there’s often an education gap, which means they find it difficult to differentiate between legal and black markets.

Results Overcooked?

KSA chair René Jansen told iGB in July that his organization had investigated more than 200 websites since the market opened in October 2021. Its enforcement efforts appear to be paying off. The regulator has been given powers to tackle illegal operators with hefty fines and to go after the payment processors that enable them.

KSA noted there are reasons to be cautious about the 85% channelization rate, which may be slightly overestimated. That’s because the survey that generated the results asked respondents to choose from a list of 22 illegal providers. There are currently more than 22 black market operators targeting the Netherlands.

KSA estimates channelization rates by analyzing web traffic, which suggested that 80% might be closer to the truth. Web traffic analysis cannot differentiate between those gambling on a site and those who simply visit it.

KSA described the market as “stable.” The regulator added that it has been generating approximately €80 million ($78.6 million) per month for government coffers.

Germany Begins Black Market Fight

Dutch success will be welcomed in neighboring Germany, which has embarked on its own battle against the black market to protect its recently launched regulatory regime.

German regulations are among the strictest in the world. They include high taxes and limits on stakes and monthly deposits – restrictions that critics say will help the black market thrive.

The success of the legal market will largely depend on the newly created German regulator Glücksspielbehörde’s (GGL) success at suppressing unlicensed operators by blocking IPs and targeting payment processors.

On Monday, German betting association DSWV said that around 400 unlicensed gambling sites are targeting Germany.