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US Sports Betting Update – industry group calls for clampdown on offshore sportsbooks

US Sports Betting Update – industry group calls for clampdown on offshore sportsbooks

The American Gaming Association has urged the US Department of Justice to crack down on offshore sportsbooks such as Bovada, MyBookie and BetOnline. AGA president and chief executive Bill Miller referred to them as “illegal” operators that “openly violate federal and state laws” in a letter to Attorney General Merrick Garland. He called on the Department to investigate and indict the largest offshore gambling sites, and to educate consumers about the risks they pose.

“While the challenge of illegal gambling is not new, the brazen and coordinated manner in which it occurs – both online and in communities – has elevated this problem to a level that requires significant federal attention,” Miller wrote in the letter. “We urge the Department to make it a priority to act… to protect American consumers, crack down on illegal operators, and enforce federal regulations.”

Miller said that the Justice Department is the only law enforcement entity that can credibly address these “illegal offshore sportsbooks and casinos.” He argued that investigating and indicting the largest offshore operators would “provide much-needed clarity that these websites are criminal enterprises, which can help to deter the American public from visiting” them. “Illegal operators have been put on notice: their days as a scourge on our nation are numbered,” added Miller. “These bad actors prey on vulnerable customers, offer no consumer protections, do not ensure integrity or fair play, and generate no economic benefit for states or tribal nations.”

The Limitations of Offshore Sites

Offshore online sportsbooks flourished before the US Supreme Court overturned a federal sports betting ban called PASPA in 2018. At that time, Nevada was the only state to offer legal sports betting, and most Americans used offshore sites or neighborhood bookies to place their wagers. Thirty-one states have legalized sports betting since PASPA was overturned, along with the District of Columbia. Some of them only permit retail sportsbooks or venues on tribal lands, but many states – including New York, New Jersey, Illinois, Pennsylvania and Michigan – offer online sports betting.

The licensed, regulated sportsbooks in the United States – a group that Miller represents – have essentially been trying to seize market share from offshore sportsbooks. They have several distinct advantages over their offshore rivals. Firstly, they can offer native mobile apps on the Apple Store and Google Play, which is not possible for offshore sportsbooks. They also have far greater marketing budgets, so they invest in highly attractive promotions, partnerships with pro sports teams and attention-grabbing commercials.

It is also easy to send money to and from an online sportsbook via credit cards, debit cards, e-wallets, PayNearMe, e-checks and Play+ cards. Deposits and withdrawals at offshore sportsbooks can be a more painstaking process. The quickest and easiest option is to use crypto, but that entails network fees and carries certain risks. The offshore gambling sites also cannot use casino software from reputable providers like NetEnt and IGT, so they have to use games that are comparatively poor in quality.

Some Unfair Advantages

However, offshore gambling sites also have certain advantages. For example, sites like Bovada, MyBookie and BetOnline have minimal tax obligations in their jurisdictions, and they can often afford to provide better odds and sharper betting lines than regulated sportsbooks. They also do not report players’ winnings to the IRS, so some people may see a tax advantage in using them.

These sites have also spent years building up relationships with US sports bettors. There are some pure scam sites out there, but Bovada, MyBookie and BetOnline are renowned for always paying customers the winnings they are entitled to. They also cover more betting options, because they do not follow state or federal betting laws. For example, they accept bets on US elections and other political markets. MyBookie even takes bets on celebrity divorces and deaths, and it is currently offering lines on Elon Musk’s mooted Twitter takeover and the gender of Britney Spears’ baby. They can take bets on all college sports too, while licensed US sportsbooks are often restricted on the college games they can cover.

These offshore sites accept players from across the United States, including large states such as California and Texas, which have not legalized sports betting. They also continue to provide stern competition for regulated operators in other states. The offshore sites host online casino games, poker tournaments and racebooks too. Online casino gaming is only legal in six states, so they have a large potential audience in the other 44 states to target.

A Lack of Oversight

Yet these online gambling sites are unlicensed and unregulated in the United States. That means players do not benefit from any consumer protection laws. If an offshore sportsbook decides to withhold your payment for a spurious reason, there is no watchdog to complain to. You are essentially reliant on the offshore betting site’s goodwill, while also putting your trust in its security measures.

Two of the sites that Miller mentioned – Bovada and BetOnline – are not regulated by any gaming commissions. They are based in Costa Rica. Both of them are licensed companies, but Costa Rica does not have a gambling commission or a gaming control board, so no authority has oversight of them. That means nobody is checking the Random Number Generators on their casino software to ensure that they are delivering fair results. Nobody checks that the sites are grading wagers fairly or taking appropriate steps to cut out underage gambling or promote responsible gambling.

MyBookie is also based in Costa Rica, but it has obtained a license from Gaming Curaçao, which is a government agency on the Caribbean island. Regulators in Curaçao will hold it to account to a certain extent, but Gaming Curaçao clearly does not carry the same sort of weight as the New Jersey Division of Gaming Enforcement or the New York State Gaming Commission.

Miller wants the Justice Department to go after these sites. “A vast illegal sports betting market continues to exist through offshore websites, which have established well-known brands – such as Bovada, MyBookie and BetOnline – that operate with a high degree of visibility and are readily accessible to every American with a smart phone or Internet connection,” he said. “These

illegal sites also enjoy many competitive advantages that allow them to offer better odds and promotions and ignore any commitment to responsible gaming because they do not pay state and federal taxes or have comparable regulatory compliance costs and obligations.”

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