US casinos, gaming companies and lawmakers are calling on federal prosecutors to crack down on illegal offshore gambling sites they say are evading consumer protection rules.
The push comes as sports gambling has expanded rapidly in the US in recent years, with more than 30 states and Washington DC allowing it.
“What was once a relative nuisance, is now becoming a serious threat to the legal, licensed gaming industry,” Bill Miller, CEO of the American Gaming Association, told CNBC in a recent interview.
one in Letter to Attorney General Merrick Garland This spring, the AGA asked the Justice Department to investigate well-known offshore gambling sites that are openly violating federal and state laws and openly paying for ads targeting American gamblers.
Then on June 29, more than two dozen members of Congress sent a letter Calling on the Justice Department to investigate and prosecute illegal offshore sportsbooks.
The Justice Department has not yet responded to AGA’s letter or CNBC’s request for comment.,
The challenge for the gaming industry has increased as online searches for offshore sportsbooks in the past year grew faster than searches for regulated operators, according to the AGA. According to a survey by the association, more than half of gamblers say they still bet on offshore sites like Bovada, Mybuki and BetOnline.
FanDuel CEO Amy Howe told CNBC: “There are hundreds of illegal or unregulated operators that are placing sports bets every day. We estimate that potentially $15 billion is going through some of these offshore operators.”
The legal operator, including FanDuel, is owned by flutter, draft kings, Kaiser and BetMGM, co-owned MGM Resorts And antenSpend billions of dollars on licensing, marketing and lobbying to legalize sports betting in new states.
The companies say offshore operators compete for customers without a license or lobbying or paying state and local taxes.
“It gives them an unfair competitive advantage. They can give the consumer better odds,” Howe said. He added that many players do not even know when they are using illegal betting sites.
Some gamblers used offshore bookies for years before the Supreme Court overturned the Professional and Amateur Sports Protection Act in 2018, paving the way for states to legalize sports betting.
Professional gambler Justin Verlander says that many high rollers use offshore gambling sites because they allow larger transactions and accept credits.
Courtesy: Justin Verlander
New Jersey gambler Justin Wunderler said he used to bet on sports via offshore sites starting in high school, when it was the only option to bet on sports. Since then, he has been burned several times when he could not withdraw money from offshore speculators.
“I kind of screwed up,” he said. “They got away with my winnings, and that’s it. Sometimes bookmakers don’t pay when you win.”
Howe said unregulated sites often overlook the responsible gambling safeguards that US operators have taken to maintain their licenses. She said that 25% of FanDuel’s customers who switch from illegal operators do so because they were not paid their winnings.
Yet some experienced gamblers continue to use unregulated sites, which are pulled in by more profitable odds or promotions or because the sites allow high rollers to bet on credits. Also, some frequent gamblers may find their bet limits on legal sportsbooks in the US restricted.
Wunderler said offshore sites allow much greater range, including “sharks,” who are experienced, knowledgeable gamblers. “Some of them can go up to $50,000, while some of these legit sites you can only bet $120,” he said.
According to the Gaming Association, online searches for offshore betting sites have declined in states that have legalized sports betting. But offshore site Bovada still accounts for half of the nationwide sports betting-related searches, the AGA told CNBC.
The AGA’s Miller said the gaming industry wants to partner with Google and other Internet search engines to stop replacing results with illegal sites.
The casino industry is also asking law enforcement to crack down on unlicensed gambling machines, which are often kept in taverns, mini-marts and gas stations.
credit: American Gaming Association
The casino industry is also asking law enforcement to crack down on unlicensed gambling machines, which are often found in taverns, mini-marts and gas stations. They look, sound and play like slot machines, but manufacturers call them “skill-based” games to avoid gambling rules.
“Why it matters is that they haven’t been tested. There’s no quality assurance around the barriers,” Miller said. And if the machines don’t pay, he said there’s rarely accountability from the host location.
rich Manufactures the popular Buffalo slot machines, as well as many others, which are licensed in 300 US jurisdictions. Its CEO Hector Fernandez said unregulated manufacturers stole designs and other intellectual property from the company.
Fernandez said that he is also concerned about the lack of consumer protection with unregulated games.
The industry is working to educate players about unregulated operators, although it says it can be difficult to tell the difference between legal and illegal operators.
“Educating the public who are generally unaware that they are betting on illegal sites or illegal sites is a task for all of us,” Miller said.