IFHAC Eyes the Concept of Channelisation

“What’s the concept of channelisation – the proportion of betting activity conducted through licensed and regulated operators rather than illegal markets.”

“Channelisation should be viewed not simply as a measurement of market health, but as a policy that regulators and governments should actively design their betting frameworks to achieve.”

Today Martin Purbrick highlights how excessive taxation, restrictive product offerings and limited consumer awareness can reduce channelisation and drive bettors towards illegal operators.

As Chair of the IFHA Council on Anti-Illegal Betting and Related Crimes, Martin notes the limitations of enforcement in combating illegal betting, where legal markets struggle to remain competitive.

“In identifying three factors that influence channelisation: competitive taxation, a broad and attractive range of legal betting products, it’s a consumer understanding of legal and illegal operators.”

“Regulators should adopt a ‘channelisation by design’ approach, using channelisation as a framework to assess policy decisions and strengthen legal betting markets, while protecting consumers and supporting the integrity and funding of racing and other sports.”

‘Channelisation is the amount of betting activity which takes place through legal ‘channels’ compared to illegal ones, such that the higher the channelisation rate.’

‘The channelisation rate is the share of total gambling activity, measured by gross gaming revenue, number of bets, or digital traffic, that flows via licensed, regulated operators’

‘It’s a useful indicator – the higher the rate, the greater the proportion of consumers and betting activity within a framework of consumer protection, taxation, and oversight.’

‘A high channelisation rate indicates the regulated market is working, with more consumers choosing the legal market – a low or declining rate is that the illegal market is increasing, usually by more attractive product and/or lower price, often high tax on legal operators.

‘Gambling regulators and government policy should engineer its regulatory, taxation, and legal betting product to maximise channelisation so they can sustain the commercial health of legal betting markets and protect consumers from unregulated operators.’

‘Racing authorities are stakeholders in the regulatory environment because of the intrinsic relationship with betting and to support channelisation as a key part of maintaining the funding as well as intelligence flows on which integrity in racing depend.’

In Australia, the channelisation rate has fallen from 74% in 2021 to 64% in 2025, with betting volumes reduced by 5% while offshore illegal betting grew by 14% over two years.

Australia has a mature legal betting market with multiple licensed operators offering a varied range of products, an indication of erosion of regulated market by the illegal market.

Channelisation data provides a visible indicator of legal betting market health, and should be refined by regulators in Australia to better understand the market situation.

In Brazil, regulated betting was launched in January 2025 but within six months illegal operators captured 51% of the market despite over 11,000 domains being taken down.

Tax is a critical structural reason for the illegal market in Brazil, and in a 2025 study ‘increasing the sector’s tax burden may encourage illegality and could even reduce potential tax revenue.’