Illegal online gambling operators account for approximately a third of the market in the European Union, while in some countries their share exceeds 50 percent of certain market segments. This has become the number one problem. Regulatory bodies and law enforcement organizations warn about the connection of part of the illegal market with organized crime, money laundering, fraud, identity theft, financial crime, and other forms of illegal activities. These platforms can also be accessed from Montenegro, said a member of the board of directors of the European gambling organization EUROMAT and the secretary general of the Croatian Association of Gambling Operators (HUPIS) for "Vijesti". Filip Jelavic.
The government's coordination body for games of chance announced in 2024 that 132.109 transactions worth 6,3 million euros were made from Montenegro on foreign illegal gambling sites in 2022, and 133.445 transactions worth 6,1 million euros a year later. Banks were subsequently banned from transferring money from accounts in Montenegro to foreign accounts for the purpose of gambling, while the Electronic Communications Agency (EKIP), acting on orders from the Gaming Authority, has since blocked around 450 known illegal sites, but with allegations that new ones are constantly appearing.
Jelavić points out that illegal operators are now using extremely sophisticated methods to circumvent national regulatory systems, to operate across a large number of connected domains, to use alternative payment methods, crypto assets, affiliate networks, influencers, social networks, messaging applications, and various technological mechanisms to conceal the real identity and location of their business.
Kurosao, KAMORI and domestic influencers
Such sites are most often formally registered in offshore destinations, such as the territories of Curacao, Comoros..., but they find ways to be visible around the world even though they are not registered for those countries. They have websites in multiple languages, including Montenegrin, use regional agents for promotion, as well as local influencers, including from Montenegro, who openly advertise them on social networks, offer registration codes and bonuses, and help players avoid domestic bans and regulators.
Organizers in Montenegro have previously warned of the growth of illegal betting via foreign websites, innovative domain name changes to circumvent regulators, and open advertising through influencers. They also pointed out that the increase in fees for regular domestic organizers, as well as the introduction of a tax on winnings, has created even more space for illegal betting.
Jelavić says that in recent years, Montenegro has ranked among the countries that have significantly increased the fiscal burden on legal organizers:
“The experience of numerous European countries shows that excessive fiscal burdens, especially when not accompanied by strong measures against illegal operators, lead to a serious outflow of players towards the unregulated market, and consequently to a reduction in tax revenues and the efficiency of the regulatory system. This risk is often underestimated. Particularly problematic are tax burdens that are directly or indirectly passed on to the players themselves, and measures that reduce the ability of legal organizers to compete in the unregulated market through bonuses, promotions and other legitimate market tools. It is precisely such measures that very often lead to the migration of a large number of players towards illegal operators who do not pay taxes, do not respect regulatory restrictions and at the same time offer significantly more aggressive bonuses, benefits and game conditions.”
When regulators overdo it, the black market grows
Jelavić states that a pattern is seen in an increasing number of European markets - when regulatory measures begin to reduce the competitiveness of the legal market, and at the same time there are no effective mechanisms to combat illegal operators, the result is the growth of the gray and black markets.
“The experience of most EU member states shows that a successful regulatory model does not rest solely on increasing taxes, but on finding a balance between player protection, the fiscal interests of the state, the sustainability of the legal market and the effective suppression of illegal competition.”
When asked how much the illegal market threatens legal producers and state revenues, the "Vijesti" interlocutor says that this is one of the most important regulatory issues in Europe today and an issue that will largely determine the future of this industry in the coming years.
“Illegal online operators do not pay taxes or fees in the country in which they offer their services, are not subject to local regulatory oversight, do not implement anti-money laundering (AML) measures, often do not comply with personal data protection regulations (GDPR), do not conduct adequate user identity checks, do not participate in player self-exclusion systems, and generally ignore standards of responsible gaming. Regulatory bodies and law enforcement organizations have warned of the connection of part of the illegal market with organized crime, money laundering, fraud, identity theft, financial crime, and other forms of illegal activities.”
Triple damage
Jelavić states that illegal sites cause triple damage - legal sites lose part of the market, the state loses significant budget revenues, while players remain outside the protection system that exists with licensed operators and can become victims of fraud and theft and misuse of personal data.
“Licensed European operators today mostly implement a series of measures that significantly exceed legal obligations precisely because they understand their social responsibility. Illegal operators do not respect either legal or voluntary standards and often use extremely aggressive and predatory models of user acquisition and retention. Numerous European experiences show that excessive burden on the legal market, without simultaneously suppressing the illegal market, leads to a large number of players switching to illegal operators. The consequence is paradoxical - in the long run, the state can collect less, not more, revenue. This is a fact that is confirmed today by a growing number of studies and market analyses across Europe. That is precisely why more and more European countries are starting to review individual regulatory measures and assess their real effects - whether they direct players towards the legal or illegal market.”
Three pillars of struggle
Therefore, as he states, the fight against the illegal market cannot be partial, and that according to the experiences of countries that achieve the best results, the system must rest on three equally important pillars.
"The first pillar is the blockage of financial flows. In other words, it is necessary to disable payments to illegal operators, but equally important, payments to users. As long as it is possible to easily deposit and withdraw funds, illegal operators will continue to attract players. The second pillar is the blockage of access. This includes blocking domains, websites and other digital channels through which illegal operators reach users. The third pillar is the blockage of promotion. If illegal operators can advertise freely through social networks, search engines, affiliate networks and influencers, then the fight against them is doomed to limited results. No single measure on its own is sufficient," said Jelavić.
New regulations in Croatia triple the black market
Jelavić points out that in Croatia, after the adoption of a new law and a series of additional regulatory restrictions, for the first time in more than fifteen years, an increase in illegal gambling has been recorded again, and especially the growth of the illegal online market.
“The number of illegal operators actively targeting Croatian players has tripled, while the number of visits to such websites has also increased manifold. The coincidence between the growth of regulatory burdens on the legal sector and the explosive growth of the illegal market can hardly be ignored. Any new regulatory or tax measure that additionally burdens legal organizers, and is not accompanied by immediate and effective measures against illegal operators, in practice opens up space for the unregulated market. This is precisely why successful European policies today increasingly emphasize the need to achieve a balance between player protection, the sustainability of the legal market and the decisive fight against illegal operators. Without this balance, it is not possible to achieve either the regulatory or fiscal goals of the state.”
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