Illegal Offshore Online Gambling Targeted By Seven State Regulators
A coalition of regulators from seven gaming states is urging the US Department of Justice to prioritize fighting illegal, offshore online gambling.
The Michigan Gaming Control Board (MGCB) was the last to join a coalition that includes:
- New Jersey
MGCB asks attorney general to address the threats of offshore gambling
MGCB Executive Director Henry Williams and fellow state regulators asked Attorney General Merrick Garland to address the significant threats offshore gambling poses. State regulators feel they need help tackling these threats.
According to the Michigan Gaming Control Board, Williams wrote in an April 28 letter:
“In Michigan, strict laws and rules govern internet gaming and sports betting and provide consumer protections, promote confidence and ensure fair and honest gaming. We are willing to help the US Department of Justice in any way we can as it pursues enforcement of US laws against offshore illegal gaming enterprises that take advantage of our citizens.”
The gaming states’ regulators also noted the dangers posed by illegal offshore sports betting and online casino sites, including:
- No age verification requirements to protect minors
- Lack of investment in responsible gaming programs
- No controls to prevent money laundering
- No guarantees of fair payouts for customers
- Loss of state tax revenue that funds essential initiatives like education
Illegal online gambling operators do not comply with strict licensing rules
Offshore operators do not undergo nor obey strict licensing requirements imposed on legal, regulated online casino and sportsbook operators. They also are not subject to the scrutiny of state regulators who conduct thorough background checks of regulated operators as imposed by state laws.
The letter further states:
“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.”
Regulated operators recognize the importance of licensing and understand it can be taken away. Illegal operators, however, do not face consequences for not following laws and maintaining integrity.
More than half a trillion dollars goes to offshore operators each year
According to the American Gaming Association (AGA) ‘s report last year, Americans gamble nearly $511 billion annually with unregulated sportsbooks.
AGA says this illegal gambling takes $13.3 billion in tax revenue from the state government annually. That’s nearly $2.5 billion more than legally regulated online casinos and sportsbook operators generated in 2021 ($11.7 billion).
Illegal sites also cost the regulated gaming industry $44.2 billion in annual revenue. That’s nearly half of the $92 billion combined commercial and tribal revenue in 2021.
AGA’s report estimates Americans gamble $337.9 billion with illegal online casinos and $63.8 billion with offshore sportsbooks.
The state regulators remain optimistic the USDOJ can address these issues through leadership in enforcement action against offshore operators.