Unlawful gambling in the United States is on the rise, according to findings from the American Gaming Association.
In the United States, illegal operators account for nearly a third (31.9%) of the gaming market, generating significant revenue and costing states billions in lost tax revenue. This issue has prompted various key measures and efforts to combat illegal gambling, particularly in the realms of online gambling, sports betting, and unregulated machines.
Federal Legislation and Enforcement
The Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006 aims to curb unlawful online gambling activities by restricting financial transactions related to online wagering on games of chance. Although it does not criminalize players, it targets financial institutions to block illegal gambling payments. However, the federal government has yet to legalize online poker or fully regulate online gambling, despite proposed bills like the Internet Gambling Regulation, Consumer Protection, and Enforcement Act.
State Legalization and Regulation Efforts
States are increasingly legalizing and regulating online gambling and sports betting to bring these activities into a controlled legal framework, generate tax revenue, and protect consumers. For example, California is currently debating ballot propositions (Prop 26 and Prop 27) regarding sports betting regulation, with Prop 27 seeking to allow online sports betting through collaborations with national operators.
Other states like Oregon have launched regulated sports betting markets, while some, such as Oklahoma, continue to see legislative debates and proposals around legalizing sports betting. This patchwork of legal statuses across the country reflects the ongoing challenge of combating illegal gambling.
Taxation and Compliance Measures
States that legalize gambling impose tax regimes on operators. For instance, California proposes a 10% tax on sports betting net revenues to fund public initiatives. Concerns about tax policies influencing the shift back to unregulated markets are also discussed in federal legislative contexts.
Focusing on Problem Gambling and Consumer Protection
Legalization efforts often include provisions to combat gambling addiction through funding for mental health programs, help lines, and research. Regulatory frameworks require licensing, compliance, and monitoring to reduce the proliferation of unregulated gambling machines and illegal operations.
Tribal Gaming and Third-Party Oversight
Tribal casinos play a central role in regulated gambling, but they are subject to lawsuits if operating outside authorized parameters. Tribal and state governments collaborate or face disputes over rights and regulatory reach regarding offline and online forms of gambling.
Recent analysis by the American Gaming Association (AGA) indicates that illegal igaming, unregulated skill games, and illegal sports betting have continued to grow since the AGA's last report in 2022. The AGA calls for a national crackdown on the illegal gambling market, citing the risks posed to consumers and communities by these operators.
Americans are estimated to be gambling $673.6 billion annually with illegal and unregulated operators, with one in 10 sports bettors wagering exclusively with illegal sources. The illegal and unregulated gambling market generated $53.9 billion in annual revenue for offshore betting sites and unregulated machine operators, money that is diverted from licensed operators and denies communities resources for infrastructure, education, and public safety.
Miller, the AGA's President and CEO, stated that illegal gambling operators are thriving at the expense of American consumers, draining state coffers and putting people at risk. He called for a national crackdown on the illegal gambling market and closer international cooperation to shut down offshore operators.
Sources:
- AGA.org
- CNN.com
- RegeBehe.com
- OregonLottery.org
- Senate.gov
Casinos, including casino-games, contribute significantly to the illegal gambling market, as over a third of the gaming market in the United States is operated illegally, generating revenue that costs states billions in lost tax revenue. In response to this issue, the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006 aims to restrict financial transactions related to online gambling, particularly casino-and-gambling activities, targeting financial institutions to block illegal gambling payments.
