UK Gambling Commission Flags Software Suppliers as Higher Money Laundering Risk

B2B supply chains push software sector from low to medium risk

The UK’s gambling regulator has upgraded the money laundering risk rating for gambling software suppliers, identifying growing concerns over how licensed games reach illegal gambling websites through increasingly complex business-to-business supply chains.

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The change appears in the UK Gambling Commission’s 2026 Money Laundering and Terrorist Financing Risk Assessment, published after reviewing activity between April 2023 and October 2025. It is the only sector whose risk rating changed compared with the previous assessment.

While remote casinos, betting operators and bingo businesses remain classified as high risk, and most other sectors retain their previous ratings, gambling software has moved from low to medium risk.

Resellers make distribution harder to track

The Commission links the higher rating to the way software is distributed across multiple commercial partners. Games are often sold through resellers and other intermediaries before reaching operators, creating layers that can obscure where licensed products eventually appear.

That becomes a bigger problem when suppliers do not actively monitor contracts after they are signed. As games pass through several companies, particularly in cross-border arrangements, visibility over the final destination can weaken, increasing the possibility that licensed content ends up on unlicensed gambling sites.

The assessment suggests the challenge is no longer limited to direct commercial relationships. Instead, regulators are paying closer attention to the wider network of companies involved in supplying gambling products.

Funding sources under greater scrutiny

The Commission also points to financial risks facing software businesses. Suppliers frequently receive investment and commercial payments from external partners, including firms involved in cryptoasset activities. Some cases reviewed by the regulator involved funding connected to cryptoassets, prompting greater attention to the origin of money entering the sector.

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That broader approach mirrors changes taking place across European financial regulation. Following the end of the transitional period under the Markets in Crypto-Assets Regulation, legal experts have noted that banks, payment providers and regulators are increasingly examining the full payment chain rather than relying solely on whether a gambling business holds a licence. The focus now extends to who receives funds, converts cryptoassets, performs anti-money laundering checks and ultimately controls customer risk.

Software firms face pressure despite regulatory gap

Unlike casinos, gambling software suppliers are not part of the regulated sector under the UK’s Money Laundering Regulations. They are also exempt from Licence Condition 12.1.1, which requires licensed gambling operators to maintain formal anti-money laundering risk assessments and controls.

That does not leave them outside regulatory expectations. Software companies must still comply with the Gambling Commission’s licensing objective of preventing crime from entering the gambling industry, alongside obligations under the Proceeds of Crime Act 2002 and the Terrorism Act 2000.

Elsewhere, the Commission left all terrorist financing ratings unchanged at medium across the gambling sector. It continues to assess the likelihood of terrorist financing as low but considers the potential impact severe enough to justify the overall rating.

The report also notes that the UK Government has committed £26 million over three years to strengthen action against unlicensed gambling operations, with enforcement extending across the wider supply chain rather than focusing only on operators.

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Source: europeangaming.eu