The United States gaming industry has a $550 billion problem.
That’s how much American Gaming Association Vice President, Government Relations Tres York said is siphoned from legal markets by illegal operations each year.
“It is a massive, massive problem in the United States,” said York during Monday’s “Challenges Created by Illegal Gray-Market Gambling for Regulated Markets” session at the Global Gaming Expo in Las Vegas.
“Back in 2022, we wrote a letter to then (U.S.) Attorney General Merrick Garland, urging the Department of Justice to really focus on and prioritize this issue. Everyone in this room knows how illegal offshore operators work. There is no greater money-laundering tool for national organized crime and other bad actors for creating weapons for human trafficking or drug trafficking.”
The problem isn’t limited to the United States. Michael Dugher, chair of the British Gaming Council, estimates £4.3 billion was gambled with illegal operators last year. It’s particularly affecting the 18-24 demographic who seem to gravitate to illegal sites.
“These people haven’t stopped gambling, but they’re not doing it with our guys anymore,” Dugher said.
Tiina Siltanen, vice president of Casino Veikkaus in Finland and a board member of the European Casino Association, noted that similar issues plague Europe. She said that member countries are losing up to $20 billion a year on tax revenues.
One of the problems in Europe is that consumers aren’t aware of the basics, such as who is an analyst and who is an operator.
“One of the fundamental issues is we keep talking about gaming as one big thing,” Siltanen said. “At the same time, we talk about the legal and illegal operator that operate in the same way, but they have completely different regulations. So it’s not about that, or that regulation is good. Regulation should drive the players into safe patterns, not illegal patterns where they have no protections, they have no rights.”
Siltanen added that it’s wrong to paint a picture that the biggest problems are on one side. “In fact, it’s not just the illegal gambling. It’s everything that goes along with that, that’s part of the problem,” she said, alluding to credit card fraud and money-laundering issues.
Moderator Greg Brower, a shareholder with the law firm Brownstein Hyatt Farber Schreck, noted that U.S. jurisdictions should be incentivized to root out illegal gambling, given that they’d realize a windfall in revenue and “there’s not a state that has too much money.”
York said in a poll conducted for the AGA in the last year, 90% of respondents said it’s important to bet with legal operators. But the problem is a lot of bettors don’t know what’s legal and what’s not.
“If you’re a law-abiding American and part of that 90 percent, you want to go a legal site,” York said. “But you may not be calling your gaming control board or your gaming commission to figure out what’s legal in your state. You’ll go to Google and type it in. And for a long time, the top search result would be yes, it’s legal in your state.”
Mugher said in the U.K, the issue partially involves whether regulated gambling makes bettors pay more in the long term.
To be a legal operator in the industry is expensive, Mugher noted, citing an increase in costs, which causes gambling costs to rise. “So all of a sudden, the young guys can do better (in illegal betting), where there are more free bets. The customer experience is less intrusive.”
