Bad Company: Illegal Online Gambling Marches On In USA

Even after the 2018 repeal of the contentious Federal PASPA ban, which signalled the start of legal online sports betting; the Bad Company of clandestine online gambling marches on in the U.S.A, generating some US$41 billion (£32.2bn) in illicit earnings across this vast nation last year.

Such is the unwelcome finding of a just-published report by forensic intelligence platform Yield Sec (YS), commissioned by independent gambling reform group the Campaign For Fairer Gambling (CFG).

The study looked at three states; New Jersey, New York and Minnesota; to get a spread and multi-market comparison of online gambling action across the booming iGaming space.

And the report found that despite the giant strides–online sports betting is now legal in 27 of the U.S.A.’s 50 states, iGaming in seven–, the nefarious “Bad Market” rules O.K.

New Jersey has a relatively long history of legal 360 iGaming, New York allows regulated online sports betting and Minnesota has still to greenlight any form of digital gambling.

Unchallenged

According to the report, 860 illegal sports betting and casino operators actively target the three states, with 638 affiliates promoting their services.

Together the three states generated an estimated US$9.5 billion (£7.46bn) in illicit (tax-free) Gross Gambling Revenue (GGR) in 2023, almost a quarter of the calculated US$40.92 billion (£32.14bn) GGR harvested in America’s illegal online iGaming marketplace.

“Despite the expansion of legal gambling, the dominance of illegal online gambling operators remains unchallenged ” affirms CFG Founder Derek Webb.

“Sector-friendly legislation, regulation, and tax rates have not made much of a dent.

“Despite wildly different legal regimes, these three states continue to accommodate over 800 illegal operators who operate with zero regard for state law.”

“This is one reason why we need federal involvement in the oversight of online gambling.

“We are eager to equip policymakers with real, reliable data, so that we can have more informed, balanced debate, and ultimately smarter gambling policy,” adds Webb.


Brazen Theft

And Ismail Vali, Founder and CEO of Yield Sec, points out: “This data and analysis exposes a stark reality: Illegal gambling operators are brazenly stealing money from state and federal coffers, and legitimate American industry.”

In New York State, the report estimates that some three-quarters of total online gambling GGR is trousered by underground or illegal off-shore operators: 49 percent, US$3.4 billion (£2.67bn), is raked-in by illicit iCasino platforms, while 27 percent, representing US$1.9 billion (£1.49bn), is generated by illegal online sportsbooks.

In New Jersey it’s estimated that 38 percent of total iGaming GGR is heaved off-shore: 22 percent, representing US$996 million (£782m), raided from digital sports betting; 16 percent, US$719 million (£564.61m), culled by illegal iCasino platforms.

Meanwhile in Minnesota, where no form of iGaming is currently legal, the underground iCasino market generated US$1 billion (£785.6m) GGR last year and illicit online sports betting US$929 million GGR (£729.82m).

The Campaign for Fairer Gambling/Yield Sec report concludes that–while it remains “challenging” to overcome the ongoing dominance of illegal operators in the online gambling space–, it’s time for the federal government to end this “theft in broad daylight”.

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