Half of people who used an offshore site were on the BetStop register that prevents Australian wagering companies targeting them, according to figures produced by H2 Gambling Capital for the peak representative body Responsible Wagering Australia.
Numerous reports say Australian bookmakers have targeted people on BetStop and encouraged them to punt more through bonuses and offers, despite their self-exclusion.
About one in three punters who used banned sites were placing bets using credit, which is illegal in Australia.
Punters were easily able to skirt Australian regulations, Responsible Wagering CEO Kai Cantwell said.
"Unlike licensed operators, who use data to identify and support at-risk customers, illegal sites use it to target vulnerable Australians and minors with high-risk offers and exaggerated bonuses," he said.
"Australia's world-leading consumer protections are only effective if people stay within the system, and right now, it's too easy to bypass them offshore with a few clicks."
The illegal offshore market has doubled to $3.9 billion annually since 2019 and makes up more than a third of the Australian market, according to the H2 report.
It predicts the offshore market will grow to $5 billion annually by 2029.
Half of people placing bets on offshore markets said they wanted better odds and promotions, while about one in five said they wanted access to live in-play betting which is restricted in Australia.
This coincides with more than 60 per cent of Australians being exposed to ads by offshore operators.
Gambling companies are raising concerns about the prevalence of illegal offshore sites as they face domestic pressure from harm reduction advocates pushing to ban advertising and curb the use of inducements that encourage people to bet more.
Problems with unregulated offshore providers include a lack of consumer protection.
A landmark parliamentary report called for a phase-out of online gambling advertising and inducements being offered by wagering providers, but the federal government has yet to respond to the recommendations more than two years later.
Responsible Wagering is calling for more stringent enforcement of blocking international sites including working with banks to block transactions, a national blacklist for illegal gambling sites and beefed up powers for the eSafety commissioner.
The parliamentary report has also recommended the Australian government figure out how to block offshore sites quickly, crack down on transactions and strengthen sanctions.
Mr Cantwell said offshore sites siphon money that props up Australian sports and racing, which the H2 report predicts will cost almost $2 billion in lost government revenue and almost $800 million in lost product fees.
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