Why is the gray gambling growing rapidly?

As you know, the gambling market is quite multifaceted. So it’s difficult to simply divide it into legal and illegal segments.

The fact is that the status of each product, platform, and service depends directly on the country in which they operate. It’s no wonder we talk so much about the specifics of different geos, the licensing system, and other legal aspects related to online gambling.

We understand that an operator licensed in one jurisdiction isn’t necessarily authorized to operate in another territory. For example, holding a Curaçao license does not in itself mean that an operator is automatically legal in all countries where its website is accessible.

Despite tighter regulations, the unregulated segment isn’t disappearing. On the contrary, its scale continues to grow. In this article, we’ll discuss why this is happening. So read the material below and draw your own conclusions.

The Market from a Statistical Perspective

Gaming Compliance International recently released its “Online Gaming 2025: Global” report, which thoroughly explains the reasons behind the “boom” in the popularity of the gray market for gambling.

Let’s take a look at some figures:

The study showed that in 2025, the volume of wagers in the unregulated iGaming sector reached approximately $5.9 trillion. For comparison, in 2023 this figure stood at about $5.1 trillion, and in 2024 it rose to $5.7 trillion—an increase of approximately 12% year-over-year.

The calculation includes several categories:

• online casinos;
• crypto casinos;
• sports betting;
• poker;
• lotteries.

Prediction markets are increasingly being added to this ecosystem, a topic to which we have dedicated an entire article. Platforms such as Polymarket and Kalshi find themselves in a gray regulatory area: some jurisdictions view them as gambling products, while others regard them as financial or exchange instruments.

The scale of the unregulated iGaming sector is particularly evident when compared to the legal sector.

According to the data cited in the report, the unregulated segment accounts for about 78% of global GGR, while the regulated segment accounts for only 22%.

This is no longer a small part of the industry that exists on the periphery. In terms of scale, this market could be compared to one of the world’s largest economies: if unregulated iGaming were a separate country, it would rank third in this regard, behind the United States and China.

There is another problem. Online gambling remains one of the most attractive sectors for cybercriminals. At the same time, it is becoming increasingly difficult for the average user to tell when they are dealing with an operator that operates within the framework of local legislation and when they are dealing with a platform without the proper license.

And this is where things get really interesting.

The line between gambling, finance, and entertainment is blurring

Just a few years ago, the market was roughly divided into two camps.

On one side were licensed casinos and sportsbooks. On the other were sites that lacked the necessary permits and operated outside the scope of local regulation.

Now, this framework is no longer sufficient.

Another category is gradually emerging: “unrecognized iGaming.” This category includes products that may have mechanics similar to gambling but are formally positioned quite differently.

Among these areas are:

• social casinos;
• sweepstakes;
• questionable financial products, including binary options and pseudo-investment services;
• skin trading in online games;
• cash contests on TikTok;
• prediction markets.

And this creates a kind of trap for the average user. Whereas in the past, a casino or bookmaker could be recognized fairly easily, today betting mechanics may be hidden within a financial app, social platform, game, or prediction service.

As a result, ads, promotions, bonuses, and offers from various sources are constantly intermingled. And the more such products appear, the harder it is for users to assess their true nature.

Tighter Regulation = Growth of the Gray Market

At first glance, it might seem that tighter regulation should automatically shrink the illegal market. But, as you know, in practice, things play out somewhat differently.

Legal operators are forced to comply with an ever-increasing number of requirements. These include KYC, age verification, self-exclusion mechanisms, limits, responsible gaming rules, advertising restrictions, requirements for payments and the handling of personal data, as well as tax obligations.

For the government, this is a way to make the market safer and more controllable. For some users, it creates additional barriers.

This is precisely what unregulated platforms take advantage of.

On these platforms, registration can take just a few minutes, identity verification is often minimal or nonexistent, and accounts can be funded via cryptocurrency or other alternative payment methods. In other words, users gain easier access to the product, though they also assume significantly greater risks.

The Convergence of Digital Audiences

Users from the cryptocurrency, betting, trading, and prediction markets sectors often overlap. Someone who is already accustomed to digital assets and decentralized services can switch between different products much more easily. As a result, the line between these sectors is becoming less distinct.

Prediction markets are particularly telling. Their popularity is growing rapidly, and regulators in different countries are defining their status in their own ways. We are now seeing that some of these products are moving into the regulated segment, while others continue to operate without a local license.

The unregulated iGaming sector actively uses another powerful tool: illegal sports broadcasts.

According to the report, advertisements for unregulated gambling appear in more than 80% of illegal sports broadcasts in the U.S. and the U.K.

The logic here is obvious: the audience is already gathered in one place, interest in sports is high, and ads for betting products fit naturally into the viewing experience. It’s a win-win!

There is particularly great potential for attracting new users during major sporting events—which is no surprise to anyone.

In Summary

Can we say that the “gray market” will disappear? Definitely not. Can we assume that it will continue to dominate the gambling sector? Absolutely. 

And the reason here lies not only in the fact that users are seeking easier access to gambling products. At the same time, the digital market itself is changing: betting is appearing in financial services, social media, online games, and prediction platforms.

Meanwhile, regulators are moving in the opposite direction—tightening controls over payments, advertising, age restrictions, personal data, user behavior, and more. 

The result is a paradox: the stricter the rules become for legal operators, the more attractive an alternative without excessive checks may seem to a portion of the audience.

Whether this is good or bad—that’s for you to decide! 

And we thank you for reading this article. See you soon!