Although iGaming and sports betting are now legal in at least 33 states of the US, much of the country’s revenue and potential taxes are still being lost to illegal offshore gambling. In a bid to curb this negative trend, gaming regulators from seven states have now called on the Department of Justice to crack down on unlicensed operators.
In a letter directed at Merrick Garland, the US Attorney General, these regulators demanded that the federal government intensify efforts against all forms of illegal gambling in the country. The letter, which was sent by Kirk Hendrick, the Board Chairman of the Nevada Gaming Control Board, also included signatures from representatives of Michigan, Louisiana, New Jersey, Colorado, Illinois, and Mississippi.
State Regulators Become Third Group to Write the DOJ in Only Three Years
Before now, the American Gaming Association (AGA) has been at the forefront of the campaign against all forms of illicit offshore gambling. The President of the AGA penned a similar correspondence to the office of the Attorney General and the Department of Justice sometime in April 2022.
While clamoring for an investigation into illegal platforms back in 2022, Bill Miller, CEO of the American Gaming Association deemed those sites as the greatest threat to the legal gambling industry.
“What maybe at one point in time was a relative nuisance, is now becoming a serious threat to the legal, licensed gaming industry,” Miller affirmed in a televised interview.
Similarly, 25 bipartisan members of Congress also forwarded a letter signed by Dina Titus, representative of Nevada, calling for increased action in June 2022. According to stakeholders, this cry for concerted efforts have become necessary considering the laid-back attitude of the Justice Department towards popular offshore gambling sites.
The last time the Department of Justice launched a major onslaught against illegal gambling sites came 12 years ago, when the agency cracked down on three online poker sites. Many now refer to this event as Black Friday. However, not much has been achieved at the national level since then.
Reports Suggest the US Loses Over $13 Billion to Illegal Offshore Gambling Annually
Recent statistics released by the American Gaming Association reveal that the country loses $13.3 billion worth of gambling tax revenue to unregulated offshore sites. In 2021, the total gambling tax revenue generated from legal operators amounted to $11.7 billion. What this report implies is that the US loses more tax revenue than it brought in in 2021.
“Illegal and unregulated gambling is a scourge on our society, taking advantage of vulnerable consumers, skirting regulatory obligations and robbing communities of critical tax revenue for infrastructure, education and more,” Miller said in a press conference while addressing the above report and discussing the ripple effect of offshore gambling on the nation’s development. “We have always known that the illegal and unregulated market is expansive, but this report illuminates just how pervasive it is.”
The need for offshore gambling in the US abated in 2018 when the Supreme Court legalized sports betting by overturning the Professional and Amateur Sports Protection Act. However, licensed operators lament that many gamblers still visit unregulated sites because they do not have the legal limits and restrictions of regulated platforms.
However, many of these bettors come running back when hit by fraudulent and unethical practices. For instance, CEO of FanDuel, Amy Howe recounted in 2022 that 25% of the site’s customers come from people who were not paid winnings by illegal operators.
“State regulators like the MGCB ensure operators offer products that pass technical standards and testing, and we also require operators to comply with reporting requirements. Offshore operators flaunt state regulations and offer products that do not protect the public, which greatly concerns me and my fellow state regulators,” Henry Willians, Executive Director of the Michigan Gaming Control Board noted while speaking about the obvious disadvantages of unlicensed sites.
In the same breath, Williams assured that the states are willing to help the Department of Justice to enforce US laws against offshore illegal gaming enterprises.