The scale of the shadow economy: when “disguised” gambling surpasses national economies

Recently, Gaming Compliance International published its report, GCI Online Gaming 2025: Global, on the global unregulated gambling market. According to the company’s estimates, the scale of the market is truly staggering, even by global economic standards, reaching an annual betting turnover of USD 5.9 trillion. This figure exceeds the combined budgets of many European countries and is surpassed only by the economies of the United States and China. Importantly, this includes not only directly illegal gambling operations, but also “disguised gambling” - a relatively new segment that is growing at an extraordinary pace in the online environment.

The problem of illegal gambling has always been acute across jurisdictions, regardless of whether gambling itself is legalized or prohibited. With the evolution of the online sector, the issue has become even more pronounced and has ultimately developed into an alternative economy with transaction volumes measured not in hundreds of billions, but in trillions of dollars. The recent Gaming Compliance International report confirms this trend, estimating the size of the grey market at more than USD 5.9 trillion.

Within the global grey gambling economy, an increasingly significant share is now occupied by so-called “disguised gambling.” This category includes products that replicate core gambling mechanics - wagering, and risk and reward, while legally avoiding classification as gambling. These include social casinos, pseudo-financial services, skin trading platforms, TikTok competitions, prediction markets, and other similar formats. Although they are not formally categorized as gambling products, they adopt gambling logic by embedding betting mechanics into users’ everyday digital experiences, thereby normalizing the gambling nature of the product. At the same time, such products circumvent regulatory safeguards typically applied to the licensed gambling sector, for example, responsible gambling requirements. After all, if a product is not formally classified as gambling, those regulations technically do not apply.

According to Gaming Compliance International, all segments of the grey gambling market including disguised gambling products, generate 78% of global GGR, while only 22% is generated by the legal and regulated market. This means that 78% of revenues derived from activities that could reasonably be classified as gambling are effectively neither taxed nor monitored by regulators.

This situation leads to at least three major negative consequences.

First, products that function like gambling but are not legally classified as such cannot be properly regulated. This blurs the boundaries of what constitutes gambling and the methods through which it is delivered. As a result, the risks associated with gambling addiction among users of such products increase significantly.

Second, governments lose billions of dollars in potential tax revenues. Even if we apply a hypothetical GGR tax rate of 10% to the USD 5.9 trillion market, this would amount to USD 590 billion in potential tax income. For comparison, Ukraine’s 2026 state budget is slightly above USD 108 billion - only 18.3% of that amount.

Third, due to sophisticated technological infrastructures designed to disguise gambling as other types of products, consumers perceive the market as a single ecosystem in which licensed brands, offshore operators, and disguised gambling products all compete side by side. This erodes the distinction between licensed and unlicensed gambling and creates a range of new regulatory challenges.

The conclusion is straightforward: this third, most opaque “grey” layer effectively functions as a true gambling segment and therefore requires the same level of monitoring, oversight, and regulation as the traditional licensed market. Otherwise, any efforts aimed at regulation and taxation will systematically fail to address the industry’s most dynamic and fastest-growing segment.

This is something policymakers in Ukraine must clearly recognize and take into account in the course of future gambling market reforms. Combating illegal operators has never been simple, but the challenge has now become even more complex: regulators must identify products that may not appear to be gambling at first glance, classify them appropriately, and develop corresponding regulatory frameworks.