The breakdown...

• Should the financial sector do more to combat illegal gambling?
• Payment providers are increasingly being drawn into regulatory efforts to combat illegal gambling
• As financial intermediaries, they sit at a critical junction between players and operators
• How far their responsibility should extend remains an open and highly contested question
• The European Commission has previously noted that payment blocking alone is unlikely to fully eliminate illegal gambling, but can be effective when combined with measures such as domain blocking

As regulators intensify efforts to curb illegal online gambling, attention is increasingly turning toward an often underexamined part of the ecosystem: payment providers. Banks, e-wallets and payment processors sit at a critical junction between player and operator, prompting a growing question for the industry – should they play a more active role in tackling unlicensed gambling?

The logic behind this line of thinking is straightforward. Illegal operators may be able to change domains, rebrand or relocate, but they cannot function without moving money. As a result, payment flows have become a key enforcement lever in several jurisdictions, with regulators adopting a “follow the money” approach to disrupt unlicensed activity.

A growing regulatory trend

Across Europe, there is clear evidence that policymakers increasingly view payment providers as part of the enforcement toolkit. In markets such as Finland, payment service providers are already required to block transactions to operators identified as illegal by authorities, reflecting their “key position” in restricting access to unlicensed gambling. Similarly, Lithuania has introduced a whitelist system, obliging financial institutions to block payments to unregulated operators, with penalties for non compliance.

Elsewhere, regulators are expanding cooperation with the financial sector. In Sweden, for example, closer coordination between gambling and financial authorities has been identified as a way to improve oversight, alongside new powers to compel payment blocking. 

Meanwhile, Dutch authorities have reportedly relied on banks and payment firms for nearly a decade as part of their strategy to combat illegal online gambling.Taken together, these developments suggest a clear direction of travel: payment providers are no longer peripheral actors but increasingly central to regulatory enforcement.

The case for greater involvement

Proponents of a stronger role for payment companies argue that this shift is both logical and necessary. First, payment systems represent one of the few scalable control points in a fragmented digital landscape. Blocking transactions can directly limit player access to illegal operators and reduce the viability of their business models. EU policy discussions have long recognised that restricting payments can make unauthorised gambling less accessible and deter casual participation.

Second, greater payment oversight aligns with existing anti-money laundering (AML) obligations. Financial institutions are already required to monitor transactions, flag suspicious activity and prevent illicit financial flows. In some jurisdictions, transactions linked to unlicensed gambling are explicitly treated as high-risk indicators, reinforcing the expectation that payment providers should intervene.

Third, there is a competitive argument. Licensed operators – who invest heavily in compliance, taxation and safer gambling –are often undercut by unregulated rivals. By restricting payment access to the latter, regulators can help level the playing field and protect the integrity of regulated markets.Finally, there is a consumer protection dimension. Payment blocking can act as a safeguard against fraud, reduce exposure to unsafe operators and signal to players that a site is not licensed or supervised.

The limits of payment blocking

Despite these advantages, the case for expanding the role of payment providers is far from straightforward. One of the primary challenges is effectiveness. Evidence suggests that payment blocking systems can be circumvented, for example through alternative payment methods, intermediaries or frequent changes to payment details. If restrictions apply only to certain channels, players may simply migrate to less transparent or less regulated options, including cryptocurrencies.

There are also concerns around overreach and unintended consequences. Blocking mechanisms can inadvertently affect legitimate transactions, particularly where merchant classification systems are imperfect. This raises the risk of disrupting lawful business activity and exposing payment providers to legal or reputational challenges.

Operational complexity is another significant barrier. As highlighted in Lithuania’s recent reforms, payment systems often lack the granular data needed to reliably identify prohibited transactions, complicating enforcement efforts. In more complex payment chains – where intermediaries are involved – tracing the ultimate destination of funds can be even more difficult. Finally, there is the factor of cost. Implementing and maintaining effective blocking systems requires substantial investment in technology, compliance and monitoring. For payment providers operating across multiple jurisdictions, each with different regulatory definitions of “illegal gambling,” this burden is multiplied.

A question of responsibility

Underlying the debate is a more fundamental issue: where responsibility should sit within the gambling ecosystem – and how far it can realistically be extended. Payment companies have historically positioned themselves as neutral infrastructure providers, facilitating transactions rather than policing them. From this perspective, determining whether an operator is legal or licensed is a regulatory function, not a commercial one. This distinction matters, as payment firms typically lack the legal mandate and jurisdictional clarity required to make such determinations independently.

However, this position is becoming harder to sustain. In practice, payment providers already engage in forms of “soft enforcement” through fraud detection, AML controls and risk-based monitoring. These systems require firms to assess the legitimacy of transactions, blurring the line between passive infrastructure and active gatekeeping.

There is also a question of consistency. If payment providers are expected to block transactions linked to sanctions breaches or financial crime, it raises the issue of why illegal gambling should be treated differently – particularly in clearly regulated markets.At the same time, expanding this role creates challenges around accountability. If a payment provider fails to block a transaction, is it a compliance failure or a regulatory gap?

Conversely, overly aggressive blocking risks turning private firms into de facto regulators without the transparency or safeguards of public oversight. Jurisdictional fragmentation further complicates matters. An operator may be licensed in one market and prohibited in another, leaving global payment providers to navigate conflicting legal frameworks.

Ultimately, the debate is less about whether payment providers should play a role, and more about how that role can be defined. A system that relies too heavily on private enforcement risks overreach and inefficiency, while one that excludes payment providers entirely may overlook one of the most effective intervention points available.

The move towards a shared model

Rather than framing the issue as a binary choice, the emerging consensus points toward a shared responsibility model. Under such an approach, regulators would provide clearer guidance, such as official blacklists or whitelists, while payment providers would focus on implementation. Improved data sharing between authorities and financial institutions could enhance accuracy, while technological advances in transaction monitoring may reduce false positives.

Ultimately, the question is not whether payment providers should play a role in combating illegal gambling. They already do. The more pertinent question would seem to be how that role can be defined in a way that is effective, proportionate and operationally feasible. As enforcement strategies continue to evolve, the payments sector is likely to remain at the centre of this debate – positioned not just as a conduit for transactions, but as a potential gatekeeper of the regulated gambling ecosystem.