DOJ “takes seriously” illegal gambling as college and NFL wagering kicks off

August 29, 2023 8:49 PM
Photo: Shutterstock
  • Buck Wargo, CDC Gaming Reports
August 29, 2023 8:49 PM

As the college football season kicks off in earnest this weekend and the NFL follows a week later, the Department of Justice told state gaming regulators that it “takes seriously” the issue of illegal gambling and continues to investigate offshore sportsbooks and online casinos.

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The letter released Tuesday by the Nevada Gaming Control Board was a response to one from a coalition of gaming regulators sent to the DOJ on April 28 that urged the Department to prioritize combating illegal offshore sportsbooks and online casinos.

In its letter, the DOJ said it has undertaken and continues to pursue investigations. When violations have been substantiated, the FBI will forward the allegations to federal prosecutors to pursue charges.

“The Department takes seriously the issue of illegal gambling, including illegal online gambling, and continues to successfully investigate and prosecute illegal internet gambling,” the letter said. “The FBI works hard to establish and maintain strong partnerships with both public and private entities to combat illegal gaming. The Department appreciates the adverse illegal gaming has on individuals and communities and will continue to use all available tools to detect, investigate, and prosecute illegal activity.”

In November, the American Gaming Association released a report that said illegal gambling is estimated to be a $511 billion-per-year market. That takes $13.3 billion in tax revenue from state treasuries and $44.2 billion in revenue away from legal operators.

“We’re encouraged to see this response from the Department of Justice, indicating they are continuing to pursue investigations into illegal gambling activity,” said Chris Cylke, the AGA’s senior vice president of government relations in a statement to CDC Gaming. “Offshore gambling websites are a major threat to consumers and the legal gaming industry and we are glad the Department is giving this issue the attention it deserves. The AGA will continue to engage with various levels of policymakers and law enforcement on the need to combat these bad actors.”

Nevada, Michigan, Colorado, Illinois, Louisiana, Mississippi, and New Jersey were among a coalition of states urging the DOJ to prioritize illegal offshore sportsbooks and online casinos. The letter asked Attorney General Merrick Garland to address the threats illegal gambling poses that state regulators can’t tackle alone.

The letter cited the dangers posed by illegal wagering sites, including a lack of investment in responsible-gaming programs; the lack of age-verification requirements to protect minors; no controls to prevent money laundering; no guarantees of fair payouts for customers; and loss of state tax revenue that funds important initiatives like education.

In addition, offshore operators don’t undergo or comply with strict licensing requirements imposed on legal, regulated operators. Those illegal operators also aren’t subject to the scrutiny of state regulators who conduct thorough suitability and background investigations of regulated operators as required by state laws.

In the letter, state regulators said they’re proud of the work they do to protect the public, including enforcing payout requirements and dispute-resolution procedures.

“Regulated operators recognize licensing is a privilege that can be taken away, but illegal operators do not face similar consequences for failure to follow laws and maintain integrity,” the Michigan Gaming Control Board said in a previous statement.

Thirty-four states, plus the District of Columbia, currently allow sports betting. Three states will soon be added to the mix, with Florida in limbo pending court action.

Casino consultant Brendan Bussmann, managing director of B Global who tracks sports betting in the U.S., said the federal government should devote more resources to cracking down on illegal gambling.

“This is something that needs to be dealt with in a meaningful way,” Bussmann said. “It’s good for the industry and consumers. The problem is there’s a limited amount of resources to do this and the feds have turned a blind eye for some time.”

Bussmann said other countries such as the United Arab Emirates block the offshore websites and suggested the U.S. should do the same.

“It’s about time the feds step up to the plate and deal with this issue. We know that regulated gaming is the best form out there; it puts all operators on a level playing field and offers consumer protections.”

Bussmann also suggested states that offer only retail sports betting should add mobile wagering. That would encourage more people to bet legally, as has already been the case, and eliminate a need for bookies and offshore books.

“In my home state of Nebraska, you have legalized sports betting at two facilities now in Lincoln and Grand Island and guess what? You’ve done nothing for the bookie at the frat house and nothing for all the people who two Saturdays from now will bet off Bovada while they sit in the (Nebraska Cornhusker) stadium.”