Increased State Crackdowns on Illicit Sports Betting Propels Expansion of Legal Sports Betting Operations

In a recent development, a coalition of 50 attorneys general has called on the U.S. Department of Justice to take action against illegal offshore gaming platforms. The coalition's concern stems from the risks these platforms pose, particularly to younger people and vulnerable populations.

The coalition's letter to U.S. Attorney General Pam Bondi urges the Department of Justice to prioritise enforcement efforts against unlawful online sports betting and gaming platforms. They believe that these illegal operators can undermine the integrity of state-regulated gaming markets.

The coalition has also asked for the Department of Justice to collaborate with state authorities, financial institutions, and payment processors to disrupt the financial infrastructure supporting illegal gambling. This collaboration is aimed at blocking access to illegal websites and associated payment systems, as well as seizing assets such as servers, domains, and financial proceeds used in connection with these unlawful operations.

The results of a study by GeoComply, a leading geolocation company, show a clear enforcement impact on legalized sports betting markets for the states that have taken action against illegal operators. The data suggests that taking action against illegal offshore operators can lead to growth in a state's legal sports betting market.

In contrast, states that have not taken actions against illegally operating offshore sportsbooks in recent months have not experienced comparable growth in their legal sports betting markets. This is similar to the situation in the EU, where the lack of coordinated enforcement and international cooperation allows illegal operators to dominate up to 71% of online gambling revenue, causing significant tax revenue losses and market share for legal operators.

Five states - Arizona, Louisiana, Massachusetts, Michigan, and Tennessee - have issued cease-and-desist letters or taken other enforcement actions against notable offshore operators. These states have seen growth in their active players and new accounts, and on average, have seen 10% more year-over-year growth in active players during August compared with non-enforcement states.

On the other hand, five other states - Iowa, Indiana, Kentucky, North Carolina, and Virginia - have not taken any action against illegal offshore operators. The absence of regulation and enforcement in these states has allowed grey and black markets to thrive alongside legal ones, limiting legal market growth.

In conclusion, the coalition's call for action against illegal offshore gaming platforms is based on the evidence that enforcement actions against these platforms can drive growth in legal, regulated sports betting markets, while the absence of such actions can limit legal market growth and allow illegal operators to dominate the market.

Increased State Crackdowns on Illicit Sports Betting Propels Expansion of Legal Sports Betting Operations