SYDNEY, June 7 -- The number on the Australian Communications and Media Authority's blocklist passed 1,700 last month. Six more sites - Play Jonny, ACO96, TCL99, Waboom77, Wonaco, and WooSpin - were added in May after the regulator found them operating in breach of the Interactive Gambling Act 2001. More than 230 offshore services have since voluntarily exited the Australian market. And yet, by the regulator's own accounting, the problem is not shrinking.

Research cited by Responsible Wagering Australia, drawing on Gambling Capital data, estimates that illegal offshore gambling may account for roughly 15 percent of Australia's total gambling market. That translates to potential product-fee losses of up to AU$1.6 billion for the racing an...