AI and Illegal Gambling Risks Flagged in Gambling Commission Report

The Gambling Commission has singled out the advancement in artificial intelligence (AI) and the growth of illegal gambling websites as particular areas of concern in the latest report focusing on money laundering (ML) and terrorist financing (TF) risks.

The British regulator published a risk assessment with the aim to provide a resource for the industry to form their own ML and TF risks. The assessment will also provide support to the National Risk Assessment of Money Laundering and Terrorist Financing conducted by HM Treasury and the Home Office.

The Commission said in the report:

“The risk landscape faced by licensed gambling operators continues to evolve. Technology-driven advancements in particular pose new challenges, such as the rapid development in artificial intelligence capability which tests the effectiveness of customer due diligence controls.

"The growth of illegal gambling websites also exposes operators to illicit financial flows in their business-to-business relationships.”

KYC being bypassed

In a section on remote betting, the Commission mentioned how the sector faces challenges as a result of customers not being present for verification purposes.

According to the Commission, fraudulent documentation can be used to bypass the checks, and the developments in AI tools can create further difficulties.

Deepfake videos and face swaps were mentioned as particular issued caused by AI. The Commission also said the remote sector can be exposed to financial flows from higher risk payment methods.

Black market in focus

The black market has been a standout topic of conversation in the UK gambling industry in recent months, with industry trade body the Betting and Gaming Council (BGC) keen to point out the size it can grow to, particularly in light of recent increased online taxation, which the BGC has argued strongly against.

A recent report published by H2 Gambling Capital in collaboration with the BGC showed offshore gross gambling yield (GGY) in the UK has grown by more than three times since 2019, and is expected to more than double to £1.4 billion by 2031, which will in part be accelerated by the increase in remote gaming duty (RGD), paid on online casino bets.

From the start of April, RGD was raised from 21% of GGY to 40%. In addition, general betting duty, paid on online sports bets, will go up from 15% of GGY to 25%; bets on horseracing will be exempt from this increase.

While the UK iGaming market remains predominantly onshore, offshore has been taking an increasing share of it. GGY channelisation dropped from 97% onshore in 2019 to 92% in 2025. GGY channelisation is forecast to drop to 85% by 2031. Total UK online GGY is expected to climb to £9.6 billion by 2031.

Low to high risk areas

This is the fourth time the Commission has published a report of this nature, following previous risk assessments in 2019, 2020 and 2023. In the last of these reports, the Commission noted the impact of TF had increased from low to high and that remote casino, betting (sports) and bingo was at high risk.

In the 2026 report, the Commission noted three sectors as being at high risk, covering the period from April 1, 2023 to October 31, 2025; casino, betting and bingo (remote), casino (non-remote), and betting (non-remote, off course).

Various other sectors were rated as medium risk, such as betting (non-remote, on course), and gambling software (remote and non-remote), and low risk, including the National Lottery and family entertainment centres.