A 522% Surge Nobody Saw Coming
Between August 2021 and September 2024, unique visitor traffic to 22 unlicensed betting sites offering markets on British horse racing grew by 522%. Not 52%. Not even 152%. Five hundred and twenty-two per cent. Over the same period, traffic to licensed sites grew by just 49%. Those figures, compiled by the International Federation of Horseracing Authorities and published via the BHA, represent the most alarming data point in British racing’s recent history — and one with direct consequences for the integrity and quality of the starting price.
The shadow market that undercuts every legal bet is not a theoretical concern. It is a measurable, growing phenomenon that is reshaping the economics of British racing and hollowing out the regulated market from which the SP is drawn.
The Scale of the Problem: IFHA Data
The IFHA study, conducted by analyst James Porteous, tracked traffic to a sample of unlicensed platforms known to offer betting on UK racing. The results were not merely concerning — they were startling.
Between January and September 2024, more than 600,000 unique visitors per month were accessing unlicensed betting sites, according to the IFHA’s data published via the BHA’s statement. That is not a fringe operation. It represents a substantial slice of the total betting audience for British racing, operating entirely outside the regulatory framework — no Gambling Commission oversight, no affordability checks, no Levy contribution, and no consumer protection.
A BHA survey conducted in October 2023 added a further dimension: approximately 10% of horse racing bettors reported that they had already used an unlicensed operator, according to Racing Post’s coverage of the findings. The survey drew from a sample of more than 14,000 respondents, giving the figure statistical weight. One in ten is not a rounding error — it is a structural shift.
Brant Dunshea, Acting CEO of the BHA, framed the situation in the context of the Gambling Act Review, noting that from the outset British racing had repeatedly warned of the unintended consequences of well-meaning policy decisions on the sport, including the threat of inadvertently growing unlicensed market activity. The warning, it appears, has been borne out by the data.
Why Bettors Move to Unlicensed Sites
The migration is not driven by a desire to break the law. It is driven by friction. Licensed bookmakers, under pressure from the Gambling Commission, have implemented affordability checks, stake limits, account restrictions, and enhanced due diligence procedures. For moderate and high-staking punters — many of whom are neither wealthy nor problem gamblers, but simply regular racing enthusiasts — these measures have made legal betting materially less convenient.
Unlicensed operators offer none of these restrictions. No affordability checks. No identity verification beyond a basic email sign-up. No stake limits. No account closures. For a punter who has been restricted by two or three licensed bookmakers in succession, the offshore alternative is frictionless — and the racing product it offers is identical. The races are the same, the horses are the same, and the prices are often competitive.
The IFHA’s own conclusion, as reported by Racing Post, was direct: the apparent growth in demand for unlicensed betting options from UK bettors echoes findings from other jurisdictions that over-regulating legal betting markets may drive consumers toward unlicensed alternatives — the exact opposite of what regulators intend.
There are also economic incentives. Some unlicensed sites offer better odds, enhanced sign-up bonuses, or reduced commission structures because they do not bear the costs of Levy payments, responsible gambling programmes, or UK licensing fees. The value proposition for the bettor is straightforward, even if the risks — no dispute resolution, no data protection, no recourse in the event of fraud — are significant.
The Impact on SP Markets and Racing Finance
Every pound wagered with an unlicensed operator is a pound that does not contribute to the regulated market. It does not feed into the pool from which the SP is calculated. It does not generate Levy contributions. It does not support prize money, horse welfare, or integrity services. It is, from the perspective of British racing’s ecosystem, money that has disappeared.
The impact on SP formation is both direct and indirect. Directly, reduced volume in the regulated market means thinner betting pools, fewer data points for SP calculation, and a starting price that is less reflective of the total market — because a growing share of the total market is invisible to the regulated system. Indirectly, the migration pressures licensed bookmakers to widen margins to maintain profitability on lower volume, which increases the overround embedded in every SP.
The Levy is also affected. If 10% of racing bettors are wagering offshore, the Levy base is missing a significant chunk of the revenue it would otherwise capture. The £109 million record yield masks this leakage — the reform brought offshore operators into the Levy net, but only those who hold UK licences. Truly unlicensed platforms, operating without any UK presence, contribute nothing. As the unlicensed share grows, the gap between the theoretical Levy base and the actual Levy base widens.
There is a longer-term threat too. If the black market normalises to the point where a substantial minority of bettors operate outside the regulated system, the political case for the Levy weakens. The argument that bookmakers should pay 10% of racing GGY relies on the premise that racing generates the demand for the betting product. If that demand is increasingly served by unlicensed operators who pay nothing, the compact between racing and betting frays at the edges.
What Can Be Done: Industry and Regulatory Responses
The tools available to combat unlicensed operators are limited and imperfect. The Gambling Commission can add sites to its list of unlicensed operators and work with payment providers to block transactions. Internet service providers can be directed to block access to known domains. But these measures are reactive — new domains replace blocked ones within days — and the jurisdictional complexity of offshore operations makes enforcement difficult.
The BHA and other industry bodies have called for a multi-pronged approach: stronger enforcement by the Gambling Commission, greater investment in public awareness campaigns that highlight the risks of unlicensed betting, and — most controversially — a recalibration of affordability checks to reduce the regulatory friction that is driving bettors offshore in the first place.
Whether that recalibration happens depends on the Gambling Commission’s willingness to acknowledge the trade-off between harm prevention and market leakage. The Commission’s position has been that consumer protection cannot be compromised to protect commercial interests. The racing industry’s counter-argument is that a policy that drives consumers to unregulated platforms — where there is zero protection — is not achieving its protective purpose.
For SP bettors, the practical lesson is straightforward. Betting with licensed operators — despite the inconvenience of checks and limits — is the only way to ensure that your bets contribute to the market from which the SP is drawn, that your winnings are protected by law, and that your activity supports the sport you are betting on. The shadow market may be frictionless, but it is also parasitic — and the host it feeds on is the same market that produces the SP you rely on.