Some countries have well-defined gambling regulations outlining what types of gaming activities are permitted and the rules that govern them. These regulated markets, often called white markets, require operators to obtain licenses and follow strict guidelines on areas like advertising, responsible gambling, and taxation. Jurisdictions without specific gaming laws, a centralized regulatory framework, or comprehensive oversight give room for operators to function without local licenses or compliance with domestic regulations. In the gaming industry, the term “grey operator” describes companies that take advantage of regulatory gaps in these jurisdictions. These companies provide gaming services without local authorization, sidestepping licensing requirements and certain regulatory obligations. 

The gaming industry in Africa is experiencing rapid growth, attracting both local and international investors. The lack of comprehensive gambling regulations in many African countries, along with insufficient collaboration between international regulators, has made the African gaming market vulnerable to grey operators. Brands looking to expand into African markets often ‘test the waters’ by “operating grey”, offering better odds, bigger bonuses, and using aggressive marketing to attract customers—while bypassing licensing and taxation costs. If they find the market lucrative, some eventually seek formal licenses, but many continue operating in the grey market indefinitely.

This practice creates an unfair competitive landscape that discourages legal market entry. Consider the financial and regulatory burden placed on an international operator seeking to enter an African jurisdiction legally, to:

• Register a local gaming company.
• Appoint a local director and, in some cases, include local shareholders to meet minimum participation requirements.
• Apply for a gaming license from the regulator.
• Register their trademark in the country.
• Obtain additional certifications—such as the Special Control Unit Against Money Laundering (SCUML) certificate in Nigeria.
• Pay multiple taxes, including tax on gross gaming revenue (GGR).

All of these require significant financial and operational resources. Meanwhile, grey operators bypass these obligations entirely while competing for the same market share. From a business standpoint, operating grey may seem like the more cost-effective and profitable option, especially when regulators fail to enforce compliance.

Without a legal presence, grey operators run online gaming operations, partnering with payment providers that allow them to accept bets and process winnings in jurisdictions where they are not licensed to operate, enabling the proliferation of grey market operations. Since these operators don’t pay for licenses, taxes, or compliance, they allocate their resources toward aggressive marketing campaigns, outspending licensed operators in advertising and customer acquisition, making away with significant market share, raising the question—why invest in compliance when the grey market offers a low-risk entry?

The Consequences of Grey Market Operations

The presence of grey operators has far-reaching consequences:

1. Revenue Loss for Governments – Grey operators do not pay taxes, depriving governments of essential revenue that could be used for infrastructure, healthcare, and education.
2. Unfair Competition – Licensed operators struggle to compete against grey operators who avoid the costs of compliance and taxation.
3. Risk to Consumers – Players engaging with grey operators lack protection mechanisms such as responsible gaming measures, dispute resolution, and fair payout guarantees.
4. Reputational Damage – A jurisdiction with unchecked grey market activity discourages legitimate investors from entering, stunting industry growth. Countries with strong regulatory frameworks attract reputable international brands, ensuring long-term sustainability for the sector.

A Call for Regulatory Synergy

One of the primary reasons grey operators thrive is the lack of coordination among regulators across Africa. Inconsistent regulatory frameworks allow these operators to exploit loopholes, moving their operations across borders without repercussions.

To curb this issue, African gaming regulators must adopt a collaborative approach by:

• Sharing Information – Establishing a centralized database of grey operators and suspicious activities can help jurisdictions identify and block illicit operations.
• Harmonizing Licensing Requirements – A standardized regulatory framework across multiple jurisdictions can make legal operations more attractive to international investors.
• Coordinated Enforcement – Regulators must work with financial institutions, payment processors, and internet service providers (ISPs) to identify and restrict unauthorized gaming platforms.
• Public Awareness Campaigns – Educating consumers on the risks of engaging with unlicensed operators can reduce demand for grey market platforms.

Conclusion 

As regulators and industry stakeholders converge at the Africa Gaming Expo (AGE) this February, addressing the issue of grey market operations must be a priority. Discussions should focus on the feasibility of inter-jurisdictional synergy and a unified strategy to eliminate illegal operators.

A collective effort to close regulatory gaps, enforce compliance, and establish cross-border collaboration will create a fairer, safer, and more attractive gaming industry across Africa. Regulators must take decisive action to protect the integrity of the sector and prevent grey market operators from distorting market competition.

The battle against grey market operations is one that Africa’s gaming regulators cannot afford to lose. If left unchecked, these operators will continue to drain government revenues, undermine legitimate businesses, and put consumers at risk. By prioritizing regulatory cooperation and decisive enforcement, Africa can foster a thriving, transparent, and sustainable gaming industry for the future.

Author:

Oluwabusayo Ayinde

Head of Compliance/Business Development

Aropsaid Technology Limited