A study of the recent Cheltenham Festival commissioned by Flutter Entertainment has raised fresh concerns over fraudulent activity from the unlicensed gambling market.
The study was conducted by former fraudster Alex Wood, who has now turned to protecting the public against frauds themselves. Wood was a fraudster for over 25 years, spending eight of those behind bars, but now works as an anti-fraud consultant with a range of stakeholders. He is also the Chief Executive Officer of fraud awareness course provider Reform Courses.
When discussing his findings, Wood described the nature of the unregulated market very plainly: “It’s like the Wild West. They don’t give a sh*t.”
During Cheltenham week, he found that he could place bets on sites which aren’t legal in the UK, whilst signing up under various pseudonyms which ranged from the bizarre to the unsettling.
Whilst conducting the research, Wood, is currently part of BBC Radio 4’s Scam Secrets team, was able to sign up to the unlicensed VeloBet with the same personal details as prominent horse racing trainer Willie Mullins and place bets on Cheltenham races against Mullins’ horses.
Examples of more cases saw Wood sign up to a variety of unlicensed sites without problem, including many Santeda International-owned operators, with information such as the ‘personal details’ of current nine-year-old racehorse Constitution Hill and fictional seven-year-old ‘Little Bo Peep’.
A live chat ‘operator’ even wished one of Wood’s pseudonyms a happy birthday, after he had explained that he would be turning 18 in a few days time. This would mean that the information Wood had used to sign up to the operator with would detail that he was under 18 years old at the time of the conversation – the legal age to gamble in the UK.
He also cited that, on multiple occasions after multiple conversations on live help chats, some operators were fine with him betting whilst being signed up to GAMSTOP.
Wood also presented his findings at Deal Me Out’s Illegal Gambling Prevention Conference, which shocked even some of the most knowledgeable minds in the gambling harm prevention industry.
However, he issued a stark warning that illegal operators are becoming “completely indistinguishable” from licensed sites for the average punter.
Approaching the sector from a fraud and money laundering perspective rather than as a gambling specialist, Wood later told SBC News of an ecosystem designed to extract deposits while preventing withdrawals, or at least making them more difficult.
“It’s set up to be the sort of thing where you make your deposit and you never see that money again, and the whole thing is fraud,” he said.
“It’s made very easy for people to deposit and then impossible to withdraw.”
According to Wood, the issue is not just the existence of unregulated platforms, but how convincingly they replicate legitimate operators.
Many display licensing credentials, often from jurisdictions such as Curaçao or Anjouan, without making clear that these licences hold no regulatory weight in markets like the UK.
“The biggest problem is being able to identify a dodgy site from a legit one,” he explained.
“They say they’re licensed, and the punter just sees that and trusts it.”
Underneath the surface
A key finding from the study is the use of disguised merchant category codes (MCCs), which allow illegal operators to process payments through mainstream banking channels without being flagged as gambling transactions.
Wood said this enables deposits to go through even when customers have actively blocked gambling payments via their bank – something which he himself did.
He noted: “Every penny went through because it didn’t flag on my bank as a gambling payment.
“These apps are described sometimes as things like an ‘adventure game’ or a ‘puzzle game’ on app stores, so they’re not just duping apple and meta, they’re duping they’re duping the banks.
“It’s like setting up a limited company in the UK as a fitness gym and then taking payments on behalf of a jewellery shop down the road.
“It’s very hard. If someone’s got their Visa card and they’re willing to make a payment and security passes, who are the banks (payment service proivders) to say: ‘No, we’re not doing this payment’, unless they have intelligence that actually these are casinos.”
Social media and influencer-driven growth
Wood also explained the role of major digital platforms in accelerating the reach of unlicensed operators. He pointed to social media ecosystems where the full betting journey – from promotion to transaction – can take place within a single app.
“You can see examples where the whole transaction occurs within Instagram,” he said.
“It doesn’t divert to a third party site – it all happens in the app. Their name is visible all the way through it, so they’ve got visibility of what these transactions are, and they are charging a commission on all of those deposits.
“Yes, it’s obvious, because they can see it, and they’re making money from it.
“I was at a police event and it was said that Meta makes more money from crime than any criminal outfit in the world, whether that’s romance fraudsters, illegal betting, dodgy crypto investments. They’re making more money by charging for people to show this content, than any of the influencers put together. Whilst they’re making all that money, there’s nothing you can do.
“There were people from the Home Office at this event saying: ‘We’ll sue Meta’, but they’ll just appeal, and they’ll keep appealing, and we’ll run out of money.”
He also raised concerns about influencer marketing, particularly among younger audiences, where content can portray unrealistic winning scenarios. This will be familiar to those who have followed the campaigns against illegal betting in markets like the UK and Australia.
Both countries have seen reports about influencers being paid by offshore operators to play and live stream slot games, in doing so promoting these products to their audience.
“People are being enticed to see that they could be winning eye-watering sums of money,” Wood said.
“Licensed platforms aren’t allowed to do that, but illegal sites can.”
This dynamic, he argued, is contributing to a shift in player behaviour, with younger users increasingly exposed to unregulated betting environments as their first point of contact with gambling.
Cross-border enforcement challenges
From a regulatory standpoint, Wood was blunt about the difficulty of tackling the issue.
“When it’s cross-border like that, it’s impossible,” he said, referring to operators licensed offshore but targeting UK consumers.
Efforts to block sites are often ineffective, with operators quickly reappearing under new domains. As a result, he believes the most viable intervention point lies within the payments ecosystem.
“The only thing you can do is take out the payment service providers (PSPs),” he said, suggesting that restricting access to card networks such as Visa and Mastercard could disrupt the flow of funds.
However, even this approach faces limitations, as many illicit offshore operators have been using crypto payments for some time now.
Wood continued: “They’re effectively giving instruction manuals to their clients about how to do a crypto transaction and making it really, really easy.
“They don’t say: ‘You’ll be helping us by doing crypto’, they’ll say: ‘you can avoid all tax’.
“So they will tell you why you need to make a crypto payment, how to do it and how to crack on. And then it’s circumvented.”
Unlicensed market a growing risk for licensed operators
Beyond consumer harm, Wood warned that the expansion of the unlicensed market is also eroding the position of licensed operators, which face increasing regulatory and tax pressures.
“In some countries, the black market is bigger than the legal market,” he said, pointing to jurisdictions like Germany, Poland and France. A recent YieldSec study found that 62% of gambling activity in South Africa came on unlicensed sites that are not regulated in the country.
He added that current conditions risk accelerating that trend, particularly as licensed firms face tighter restrictions on advertising and customer engagement, while illegal operators remain largely unconstrained.
“If you wanted to guarantee the success of the black market, you’re doing everything right,” he said, referring to the broader regulatory environment.
While acknowledging there is no simple solution, Wood stressed the importance of raising awareness among both consumers and policymakers.
“I don’t know what the answer is other than PSPs,” he concluded.
“But there is a lot that can be done to put pressure on the market and make people aware of what’s actually happening.”