NEW YORK – A panel of gaming experts confirmed that eradicating the illegal gambling market in the U.S. will likely remain a daunting task – even with legal sports betting expanding into eight states.
“Sizing up the illegal market is impossible, to be perfectly honest,” American Gaming Association Senior Vice President Sara Slane said Tuesday. “We’ve seen estimates of $150 billion, $500 billion. All that we really know is that a lot of money is being wagered illegally.”
The discussion at the 2018 ICE Sports Betting USA conference sometimes turned a bit feisty.
Slane was joined on the panel by Jenny Williams, former CEO of the UK Gambling Commission; Vic Salerno, president of USBookmaking and a bookmaker 40 years of experience in Las Vegas; Patrick Hanley, chief of gaming enforcement for the Office of the Attorney General of Massachusetts; and Andrew Winchell, chief of staff for New York State Sen. John J. Bonacic.
“If you love sports, you love to gamble on sports. You’ll find a way. You can’t walk across a room without finding someone who bets on sports, or who’s a bookie,” Hanley said. “And the local bookies rely on a website, almost always from Costa Rica.”
Salerno added, “I think it took me about three minutes to find a bookmaker in Boston.”
The participants all agreed on the complexity of the issue and that, if a comprehensive fix is to be found, it will very probably need time to unfold. Winchell mentioned that New York State offers commercial gaming, tribal gaming, video lottery terminals at the racetracks, and a state lottery – and the state, “has a wonderful constitutional prohibition against gambling.”
There was also a consensus that further education was necessary at all levels of sports gaming, from providers and operators to legislators and the general public.
Winchell related the difficulty in getting local legislators to understand that the illegal market is real and is online all the time. He cited some unnamed lobbyists and legislative staffers who told him that they “put their money through and (the site) walked me through it, I’d love to just be able to do it that way.”
“Legislators do, huh?” moderator Patrick Everson of Covers.com interjected.
“Well, some,” Winchell said. He said that another problem is getting those same legislators to understand that legalizing sports gambling is not, by itself, a huge windfall.
Williams said that illegal gambling in the United Kingdom is largely nonexistent because of how easily customers can access legal options with familiar payment options. She set the illegal UK market at somewhere between 1 percent and 3 percent of the total. She also mentioned advertising regulations in the UK meant that potential customers weren’t getting faced with illegal options.
In the UK, Williams said, they make the third parties responsible for any consequences if they elect to deal with illegal operators.
“We just tell them, ever so sweetly, that they’d be responsible for money laundering.”
Salerno, the first bookmaker to be elected to the Gaming Hall of Fame, said, “We do nothing at all to stop offshore advertising. Until we decide to do something about it, we’re not going to solve this problem.”
Salerno believes player migration would be slower than expected.
“People are creatures of habit,” he said. “You have to offer the best odds, offer an easy way of signing up. It’s going take a lot longer to convert these people.”
Winchell added that in the U.S., a certain percentage of people will stick with illegal sports betting. “Some people just don’t want the government to know what they’re doing. We’re still busting moonshiners.”
Hanley mentioned the difficulty of trying to find and arrest people whose operations aren’t local.
“It’s never in Massachusetts. I can’t issue a warrant for anywhere else,” he said “Illegal bookies have methods that you (legal operators) don’t have. Collection methods, extortionate loans.”
Salerno said he knows of one person in the offshore sports betting business “who does $6 billion just by himself.”
Tempers flared slightly late in the session when Winchell, alone among the panelists, said that he still supports an integrity fee that would go to the leagues, albeit one significantly smaller than a full 1 percent on the handle.
“Until PASPA, the only legal sports betting that was happening was in Nevada. So it was a law-enforcement issue,” he said. “What somebody may or may not have done… might go against the league’s code of ethics but (not be) a criminal act.”
“LeBron James had a broken hand in last year’s (NBA) Final and the NBA never told anyone,” Salerno said. “You think that’s integrity? I’ve been doing this for 40 years. We’ve had very few problems. If you were to tell me that (the fee) would go to the players association, I have no problem with that. I do have a problem with giving the owners more.”
Slane said that AGA research indicates that roughly 7 of 10 gamblers who use offshore sites would prefer to gamble legally. However, the potential for conversion in coming years would depend on the platforms available and how payments are processed. Any percentage of illegal-to-legal conversion would, she said, be viewed by the AGA as a victory.
“It’s going to depend a lot on how this all gets rolled out,” she said.
