New Study Reinforces Belief That Over-Regulation Increases Black Market Gambling
Expertise: Global Gaming, Asia Gaming, US Gaming, Sports Gambling
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The findings show that many of these jurisdictions provide licenses with minimal oversight, offering lower fees and significantly shorter processing times compared to established regulators. According to the authors, this trend has created conditions that may encourage money laundering, weaken protections for players, and increase the risk of match-fixing in sports.
The proliferation of what the researchers termed pseudo-regulators has become a growing concern for the global gambling industry and integrity organizations.
The study was funded through a Research Innovation Fund Seedcorn award from the Bristol Hub for Gambling Harms Research at the University of Bristol. It was authored by journalist Steve Menary, known for his work on sports integrity, and academic researcher Marko Begovic.
Their analysis revealed how smaller nations and territories have been able to attract large numbers of gambling operators by providing inexpensive and lightly supervised licensing environments.
Anjouan, an autonomous island in the Comoros with a population of around 277,500, has become the most prominent of these new jurisdictions. By this past May, Anjouan Licensing Services reported 825 active internet gaming licenses.
The island’s appeal is built on the promise of rapid licensing turnaround times of two to three weeks and the absence of tax on gross gaming revenue. These conditions have positioned Anjouan as a major hub for offshore operators looking to avoid the stricter frameworks of traditional gambling jurisdictions.
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Other territories such as Timor Leste and the Commonwealth of the Northern Mariana Islands have also entered the market, with the latter passing legislation just recently to permit online gaming operations aimed at international consumers. While these jurisdictions have created new opportunities for operators, researchers warn that player protection measures have not kept pace with the expansion of licensing activity.
The report noted that many of these new offshore jurisdictions lack alternative dispute resolution mechanisms. Unlike established regulators such as the Malta Gaming Authority, most do not require operators to designate independent ADR providers, leaving players with limited avenues for recourse. This regulatory gap underscores the risks faced by consumers who use services licensed under these emerging frameworks.
Transparency of company ownership is another area of concern identified by the study. While countries like Estonia mandate disclosure of beneficial ownership, jurisdictions such as Anjouan have minimal due diligence requirements. This lack of oversight creates opacity around who controls the companies operating within their regulatory systems and raises questions about accountability.
The research also connected the rise of offshore regulators to the explosive growth of cryptocurrency gambling. According to figures cited from regulatory intelligence platform Yield Sec, gross gaming revenue from crypto-based gambling grew fivefold between 2022 and 2024, reaching $81.4 billion.
The digital nature of these operations, coupled with the loose licensing standards in certain jurisdictions, has intensified challenges for monitoring financial transactions and ensuring consumer safety.
Industry integrity organizations, including the International Federation of Horse Racing Authorities, have voiced concern about the role of offshore regulators in enabling the expansion of illegal betting. Officials have stressed the importance of evaluating how these licensing bodies may provide a facade of legitimacy while allowing illegal activity to reach consumers.
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