Legal vs. illegal betting: Growing challenge for horse racing industry

Sankunni K November 19, 2024

SiGMA news

The horse racing industry faces significant threats from the proliferation of illegal betting markets, which undermine the integrity of the sport, siphon billions in revenue, and enable organised crime. These black-market operators thrive due to their lack of regulatory oversight, innovative use of technology, and aggressive customer acquisition strategies.

Problem with illegal betting

Illegal betting platforms, often unlicensed or operating under weak regulatory jurisdictions, are expanding rapidly. A study by the (ARF) found that illegal online betting grew by 64 percent in recent years, compared to just 36 percent growth for licensed operators. These platforms offer competitive odds, tax-free winnings, and anonymity through cryptocurrencies, drawing bettors away from legitimate markets.

High-profile platforms like Citibet in Asia manage gambling turnovers rivalling legal markets, facilitating activities like betting on horses to lose. This compromises race integrity and fosters match-fixing. Such practices divert funds that could support essential areas like horse welfare and regulatory compliance.

Technology’s role

Advancements in technology have turbocharged illegal betting operations. With minimal setup costs, operators can deploy platforms that mimic the look and feel of regulated sites. They leverage social media, pirated sports streams, and influencer marketing to reach a global audience. Cryptocurrencies further shield these operators from scrutiny, enabling cross-border money flows without regulatory intervention .

Consequences for racing

The migration of bettors from legal to illegal markets affects not only betting operators but also the broader racing industry. In the UK, for instance, affordability checks for legal betting could push bettors toward unregulated markets, costing the industry an estimated £100 million annually. This loss affects prize funds, track maintenance, and equine welfare initiatives.

Combating illegal betting

Organisations like the ARF and the are ramping up efforts to curb illegal betting. Strategies include better international cooperation, using data analytics to track suspicious activities, and advocating for more balanced regulation of legal operators to maintain competitiveness.

Way forward

While legal betting markets are critical to supporting horse racing, overregulation can unintentionally drive bettors into illegal channels. Policymakers must balance consumer protection with market accessibility to safeguard the future of the sport.