Illegal streaming has become a prominent way of generating traffic for many unlicensed operators. You mentioned, when you spoke at ICE, the Paul v Tyson fight being a clear example of this. But how long have those streams existed and at what point did they come onto your radar as a significant traffic driver?
I came out of 20 years of operations; PokerStars, Paradise Poker, Sporting Bet, Ladbrokes, then got into consulting. I had a great reputation of consulting for lots of companies. Clients came to me and said they weren't making money. Now, I've never known an operator where I haven't been able to make money every month. That's why, when you say you're not making money, what’s going on?
Around 60% of the audience got to illegal gambling through search. At a point in 2022, that got eclipsed by illegal streaming. More than 50% of the audience was coming from illegal streaming
I started looking at the cost of crime here – it was more than people were giving it credit for. That's how I got interested in black markets. We bought a military platform then adapted that to gambling. We started doing that in 2020. We were collecting data and AI scraping, etc. We asked, where was the audience coming from?
We looked at what we call the ecosystem. There’s search, sites, social affiliates, comms, advertising and streaming. Now, streaming means illegal streaming in this context. If it was for legal gambling, it would mean some of those people have tie up deals, like Sky Bet in the UK. Illegal streaming understood that you want to place yourself right, contextually, in front of where the audience is online.
How did the Covid-19 pandemic affect this shift?
During the pandemic, audience behaviour changed. The pandemic had one of the biggest sign-up periods for Netflix, one of the biggest sign-up periods for live sports events once sports came back. But, during the pandemic, sports got cancelled for a while. There was a point where a lot of people in the gaming industry said: “It's the end of the gaming industry, there is no sports betting anymore.”
Around 2020/21, there was a horrible period where the Euros got cancelled and everyone panicked. Illegal gambling didn't panic. Sites went to find any sports they could get hold of, things like snail racing. They started streaming these sports and realised people were watching and gambling on it too. So, if there wasn't horseracing, dog racing or soccer, give them any content and they'll come to it.
They also realised social media is great for that ‘any content’ idea. If it's sexy, if it bleeds, if it's funny, people will click. Then, you can get them to other places too. Just get hold of content and put your logos on it, put your ads on it and put your odds on it as well if you've got sports. They then started doing things with illegal streaming that were a cross-fertilization of different criminal groups. You started seeing what we call the dark nexus between illegal gambling and illegal streaming. It wasn't just illegal gambling going to illegal streaming and saying, we want to advertise, it was also learning lessons like rolling dynamic URLs. Illegal gambling started learning things like: if we're going to get banned in a country like Denmark because we've got digitalgambling.com as our URL, let's not do that strategy anymore. Let's do what the illegal streaming guys do and have rolling URLs that constantly refresh. We'll place our content anywhere we need to get it to an audience. We want it to be seeded for search engines.
Can you tell me more about how these streams gain traffic?
Over what's now five years of monitoring, we've picked up this picture. You go through three clear stages of illegal streaming. There’s seeding; going out there and placing URLs all over the Internet. That will be in search, in chat, on websites. As an example, in the UK they put things in the name of hospitals. Somebody smart in illegal streaming has gone on, bought [the URL], and put a bunch of stuff there for illegal streaming and self-exclusion avoidance. You seed your content across the internet, make sure it's out there in as many places as possible, so it delivers results on search through Google and social media platforms.
Spawning is the next thing. As soon as an event is announced, it will be listed on illegal streaming sites, way ahead of it coming out. If you look at illegal streaming sites today, 123Movies, Zoechip, they will feature the Fantastic Four movie. That movie hasn't even finished production yet, but it's already been seeded... just to make sure that when the movie does come out, they've already beaten the marketing teams and sports companies and movie companies to the punch.
The results you'll find will be illegal streams before legal ones, unless legal streamers pay to get higher up on those rankings. Spawning makes sure your results are in a place where you can proliferate with tonnes and tonnes of results at the point where people can watch the content. At the point where rubber meets the road, audience meets content, that's when you want to make sure you spawn everywhere.
Do you have any specific examples?
We find with any illegal streaming event, like the Paul v Tyson fight, there were probably around 300 locations prior to the fight. In the few hours before the fight, that spawned to as many as 13,000. On those locations, you then need to load balance. All illegal streamers use free deals, 30-day free trial deals from AWS, Microsoft, etc. They're managing their load across many different free server deals as far as they can get them. They'll do cheap, if not free, deals and they don't want more than 500 to 600 people per server, because if you turn up with 50 million people watching the Paul v Tyson fight, you'll get shut down because you need to pay for that kind of load.
The reason everybody's moved away from BitTorrent streaming and downloading files? Not interested... The point of illegal streaming is not some kind of communist solidarity concept of ‘let's give everybody all this great Hollywood content and premier sports content.’ The point of illegal streaming is: You're the product. They're mining your data, taking away your ID, putting keystroke logging and malware on your machine, mining Bitcoin in the background using your processing power.
One thing they did with predictor bets was around the Super Bowl. The vast majority of bets that were entertaining, that got audiences there for illegal gambling — 30% were betting on Taylor Swift. It's got nothing to do with the game
How did you get to streaming?
We noticed during the pandemic, search was always the biggest way people found illegal gambling. They would look for best casino, best casino not on Gamstop, best casino taking under 18 bets. Around 60% of the audience got to illegal gambling through search. At a point in 2022, that got eclipsed by illegal streaming. More than 50% of the audience was coming from illegal streaming; that was when sports came back. People couldn't afford the stuff they got used to during the start of the pandemic... People started moving away from it, and they found illegal streaming ready to welcome them immediately.
The overall audience for all gambling, the way Yield Sec looks at it, every marketplace has one marketplace. It has two industries in it — one legal and licensed, one illegal and unlicensed. Similarly with streaming, you have a streaming marketplace in the UK, in France, in Germany. All these things are based on geographical content rights.
What's really going on with streaming and the reason that no streaming companies are making money; it’s huge revenue, great subscriber growth, but those are easy things to assume and show people when you're giving away free accounts. I'm traveling in Latin America for the business right now: here, you can barely go into a gas station and fill up your tank without being offered "free Netflix". They're getting subscriber growth from things like free accounts for six months, but then people don't pay for them at the end of the six months. It might look like the numbers are going up, but you're masking the fact that people aren't paying for this, and illegal streaming is the biggest problem for streaming companies.
How are illegal streams operating, financially, then?
So, looking at the Paul v Tyson match, 20 million illegal stream views, based on how many people were connected for 90+ seconds (90+ seconds means they are committed to the content, in our view)... Quite often you'll be interrupted at 90 seconds to give you more advertising, which means you need to refresh the feed again. Most of the advertising, 97% of all the ads, are illegal gambling ads. Whatever the form of illegal streaming is, whether it's movies, TV or sports events. Most people are right in front of illegal gambling all of the time.
One other thing to mention. There was a point where illegal streamers were interested in trying to charge audiences for content. So, if Sky Sports was running at £30 ($35) a month, if the Tyson v Fury fight was running at $24.36 at an average globally, illegal streaming thought, how about you pay us $1, because they wanted to collect names, addresses and credit card numbers, and then also have the illegal gambling advertising there as well. There was a point where they thought this was an interesting business model. That changed after a minimal amount of enforcement.
When we put these numbers live last year in May, lots of people in streaming lost their mind. They said, “oh my God, it can't be true. How did you get the numbers? You must be doing something illegal.” We don't have any data on people, we don't need to know who people are. We stay well outside of data protection. We know these are anonymised users in the UK, Germany, France, the US, and they're watching this piece of content on illegal streaming websites. When the figures came out for Fury Usyk 1, less than a million people bought that fight from a price point ranging from $10 to $60 in America. If you only sold less than a million, and there are 20 times that illegally streaming it, you can see how the economics of this start to become problematic.
What are your three biggest learning points from the Paul v Tyson fight?
Firstly, audiences really weren't interested in that fight. Audiences got to that fight because of the social media storm the illegal streaming and gambling kicked up together. So, there was a whole bunch of, ‘will that fight happen? Won't it happen?’ Then it did happen, and they were doing bets. We were seeing [a lot of] predictors.
Illegal gambling is a way more diversified business than normal gambling is nowadays. They understand certain audiences don't want to be told they're gambling, don't want to be told they're making themselves a victim or subjecting themselves to risk. Predictors have come up with this nicely marketed thing in the past five years that started on financial platforms like FTX and Binance. You could predict the price of Bitcoin, where it was going to go in the next 60 seconds, 60 minutes, 60 days. Then it morphed, because those platforms want, like every social media and tech giant, user generated content.
Audiences started doing bets on sports immediately. Then, audiences started putting on stuff like, when will Barbara Streisand die? Will this person be convicted of a crime? Predictors came up on Tyson v Paul, things like, Will Jake Paul kill Tyson in the ring? That was driving a conversation that people got embedded into. And, once you've clicked on it, interacted with it on your social media, you will now see more of it... People who had any interaction with gambling on boxing were now being sold straight into the illegal streaming and illegal gambling of the Paul v Tyson fight. That's where we see that dark nexus, groups operate together.
Illegal gambling is a way more diversified business than normal gambling is nowadays. They understand certain audiences don't want to be told they're gambling, don't want to be told they're making themselves a victim or subjecting themselves to risk
That is a very interesting point about predictors. We distinctly remember people were doing predictors on the Titan submersible search in 2023.
Exactly. It's an opportunity to recruit an audience outside of those used to gambling... One thing they did with predictor bets was around the Super Bowl. The vast majority of bets that were entertaining, that got audiences there for illegal gambling — 30% were betting on Taylor Swift. It's got nothing to do with the game, but they were running bets because it was massively popular. Will Taylor Swift come to the Super Bowl? Will she be there with Travis?... Gossipy social media is now dragging audiences in. Another one that came up on Christmas, ‘will Biggie and Tupac be resurrected on New Year's Day, and Jesus will be with them?’ That's a stupid bet. You're going to lose your money. But, it was the most popular bet Christmas Eve, Christmas Day, Boxing Day in Europe and the US. People were buying that bet just to screen grab it and put it on their social media. People were buying that bet just as a form of entertainment and, again, illegal gambling sat up and paid attention. It realised, we love this thing, because now they don't even care about whether they win or not.
It's young people as well, having access to these bets. A tech savvy Gen Z who understand the internet intrinsically. Gen Z has been streaming illegally since they were teenagers. Combine that with rising costs of living after Covid. Illegal streaming's not going anywhere. But, what we’d love to know is what the industry can do to keep players off of those illegal sites that are being advertised on the streams?
In the same way there's a nexus between illegal gambling and illegal streaming, there needs to be one between legal gambling and legal streaming. These guys need to cooperate and work together.
Everything we do is based on stakeholder groups needing to work together. It is your money, it is being stolen from you. At some point, if audiences demand and desire premium entertainment content, movies, TVs, sports events, that won't happen if these companies don't make money. So, how many more times can we expect something like Fury Usyk to happen? Those fights won't happen. There won't be the prize pools available, the purses available for athletes and broadcasters and management; the whole industry that sits behind it.
Moreover, illegal gambling's found that you can go after the self-excludes. Every single one of those people who is looking for ‘not on GamStop. How do I get around that GamStop ban?’ are people with self-admitted gambling problems. That's an audience that's going to have an itch they want to scratch, and now they've got illegal gambling ready to serve them. Any search for anything to do with Gamstop on Google or social media platforms, should it be bringing you, ‘best casinos not on Gamstop,’ or should it be bringing you mental health services.
Illegal streaming and young people have an interconnection. Young people are more willing to use new technologies. You see it with other things as well, like crypto. So, if an affiliate wants to advertise to Gen Z, how do they do it without going into these illegal marketplaces, as we've spoken about?
I think you're going to see legal brands having to exist cheek by jaw with illegals all the time now, because that's where the audience is. If you're on a platform that has anything to do with Roblox, Steam, any of those video gaming platforms, you know the conversion from Roblox Robux (in-game currency) into real money is done on third-party platforms behind the scenes. So, ‘how do I change my Robux into real cash and then use them for gambling?’ You need to go through a payment wallet that works for illegal gambling.
The industries generally need to be coordinated here, to start working together to tell audiences: you are the product here. You might believe you're getting something for free, but you are being stolen from just as much as we're being stolen from. That's the point here. Asking the question, when did I last illegally stream, should become the thing police are asking every time somebody goes, my old bank accounts disappeared.
We've got one more for you to round things up. In terms of emerging traffic trends, are there any new ones Yield Sec has been keeping an eye on?
I'd say here, the emerging traffic trend is amateur sports content, which is really interesting for us. Illegal gambling and illegal streaming worked out you can push people stuff that's irrelevant content, that you can make sexy and spicy, just by having some feature on it. We've seen footage from war zones like Ukraine and Israel Gaza, where they're saying, where will the bombs land next? They're offering betting on that. We've seen things like children's basketball from Ukraine, where you can see fighter planes and artillery being shot in the background. It's a form of content that's horrifying, but also, it's just girls' basketball from Ukraine.
Then there's any old amateur sport... They are filmed inside working men's clubs in Belarus and Ukraine and Russia, and it's a bunch of guys playing darts, table football, soccer, basketball. Children's basketball from Ukraine has been really popular, because it's got that horrible link between 14-year-old girls in too tight shorts and a war zone. So, it's really insidious, but that content's been explosive recently, it works on social media to drag an audience in.
From the data in many countries right now, and similar to the cross-fertilization between illegal streaming and illegal gambling, an area to be concerned about is adult entertainment and cam sites - and how these may become linked to new forms of gambling content, be that for promotion and even for products.
