During his presentation Monday during “Deep Dive: Illegal Operators & The Marketplace” at the Global Gaming Expo in Las Vegas, Michael Pollock showed a photo of a woman using an unregulated machine at a convenience store. The Spectrum Gaming Group managing director, who oversees economic and impact studies for the non-partisan consultancy, pointed out the child standing in front of the woman.
“You shouldn’t see this in a gaming venue,” he said. “I’m providing it as a cautionary note. This is an issue that has to be addressed, because one of the biggest risks regarding this issue is there are 100,000 machines out there – I’m guessing, as there’s no way of knowing for certain how many of these machines are. But the more there are, the harder it’s going to be to address this.”
Pollock and Yield Sec Founder and CEO Ismail Vali put forth arguments about why unregulated and illegal gambling is a threat to the global gaming economy. Unregulated gaming consists mainly of slots touted by their manufacturers as skill games. Illegal gambling is mostly relegated to online offshore sites that are neither regulated nor taxed.
According to both men, the stakes are enormous if not addressed by jurisdictions, regulators, and gaming operators. Pollock noted that by being legally licensed, operators are demonstrating good character and that they will run their companies according to the law and basic moral principles.
“Those who operate the so-called games of skill destroy the principle of what you gain from limited licensure,” Pollock said, noting that regional exclusivity zones that are part of licensing agreements are diminished by unregulated gaming. “Are you going to invest the same amount of money? No, because you wouldn’t get the same return on that money. That basic principle that has been effective for nearly a half-century and will be effective, hopefully, for at least another half-century is at risk with these games.”
Vali founded Yield Sec to monitor, police, enforce, and optimize the licensed marketplace across online betting, gaming, and lottery activity. He calls illegal operations “iceberg marketplaces,” because they’re mostly unseen.
The media, Vali said, tend to concentrate on the legal gaming markets that can be seen, the top of the so-called iceberg. “The problem in every single marketplace around the world is that we have that iceberg afloat in a sea of criminality,” Vali said. “On the internet, everything is available everywhere.
“What I’m worried about are the people who will open up an account for you anywhere in the world,” Vali added, “because all they want is your money. They don’t care if you’re underage. They don’t care if you’ve got a gambling addiction problem. … All they’re focused on is staying in that dark part of the iceberg you can’t see.”
Vali insists that operators that ignore illegal gambling are missing opportunities to increase revenue. He noted that revenue from legal sports betting and horse racing reached $40 billion in 2021, according to data provided by the United Nations. At the same time, illegal operations brought in $340 billion, eight times the size of the legal industry.
These operators get around items such as banking restrictions by “not telling anyone they’re in the gambling business. There is a constant existential threat that comes from those illegal operators,” Vali said.
