Offshore sportsbooks and “skill game” slots in your town might be getting federal attention

Posted under Info On By Alan Butler

President and CEO of Washington D.C. based American Gaming Association (AGA), Bill Miller has penned a letter to US Attorney General Merrick Garland asking him to direct the United States Department of Justice (DOJ) to pay “significant federal attention” to illegal gambling in the country, calling out three prominent sportsbooks by name.

The letter is filled with interesting facts and statistics, as one would expect from a promoter cum watchdog focused on “promoting, educating and lobbying on behalf of the gaming entertainment industry through education and advocacy,” when that trade group represents a $261 billion industry with nearly 2 million employees across the nation generating $41 billion in direct tax revenue.

There is plenty of reason to believe the motivation is not solely based on consumer protections, but it’s good to throw it in at least half a dozen times because it helps the Monop[oly-through-prohibition argument.

The AGA urged Main Justice to protect American consumers, crack down on illegal operators, and enforce federal regulations by focusing on two main areas, the first being sportsbooks and casinos, and the second, unregulated “skill game” machines. The letter doesn’t make clear just what these machines are and that could be a device to illustrate that the states don’t always know either.

The AGA is asking that they become subject to the Johnson Act (15 USC §1171), which would require the machines to be registered and anyone engaged in “manufacturing, repairing, buying, selling, leasing or using these gambling devices that enter interstate or foreign commerce should be required to file a registration with the Department“.

The letter states that the machines “clearly” meet the federal definition of a gambling device “regardless of any perceived ambiguity under state laws“.

Sportsbooks and Casinos

The other area the AGA wants the DOJ to crack down on is what it refers to as “Illegal Online Sportsbooks and Casinos”. While federal law is clear on the illegality of interstate sports betting through the Wire Act of 1961, that is simply not the case for online casinos.

The last valid written opinion from the DOJ on that matter was issued by the Obama DOJ which stated that the Wire Act only related to sports. While at one point in the Trump administration AG Jeff Session opined that interstate/international online casino gambling was illegal, and later AG Rosen was sued in the matter, the Justice Department failed to issue a binding opinion that would hold up in a court of law. A federal judge negated the Trump admin‘s opinion in a case involving the New Hampshire Lottery, adding legal precedence to the earlier Obama Justice decision and opinion.

Gambling and lottery giant IGT (GTECH/Lottomatica) went so far as to sue the DOJ in November of last year demanding a final clarification of the issue.

According to our earlier reporting: “In an 18-page complaint filed in U.S. District Court in the company’s hometown of Providence, Rhode Island, the company asked the government to clarify its position via a declaratory judgment to state once and for all if the 1961 law applies to all interstate commerce in gambling or only to sports betting for which it was originally written and passed during the Kennedy Administration in an effort to crack down on organized crime.”

Illegal Sportsbooks Highly Visible and Accessible

According to Miller and the AGA, the Supreme Court’s invalidation of the Professional and Amateur Sports Protection Act (PASPA) in 2018 has not had the effect of bringing unlicensed sportsbetting operators into the light or making them disappear altogether.

Miller writes: “With sports wagering currently authorized in 33 states and DC, more than 157 million American adults have – or will soon have – regulated, legal channels available to bet on sports in their home state. However, a vast illegal sports betting market continues to exist through offshore websites, which have established well-known brands—such as Bovada, MyBookie, and BetOnline— that operate with a high degree of visibility and are readily accessible to every American with a smartphone or Internet connection.

These illegal sites also enjoy many competitive advantages that allow them to offer better odds and promotions and ignore any commitment to responsible gaming because they do not pay state and federal taxes or have comparable regulatory compliance costs and obligations.”

Bovada, MyBookie, and BetOnline are hybrid sites that operate both sportsbooks and casinos.

“Hit the Big Guys”

It would appear that the unlicensed sportsbooks are simply doing a better job of marketing themselves, perhaps because they can afford to offer better odds since they don’t pay taxes in the U.S. and they choose to pay experts to get their brands to the top of the search engine result pages.

According to Miller, internet searches for offshore brands went up nearly 40% last year which outstripped search growth for licensed operators in the U.S. “Bovada alone accounts for 50 percent of all searches,” according to the letter.

The AGA suggests that if the DOJ investigates and indicts the most well-recognized offshore brands, it would bring consumer attention to the issue. Based on numbers provided by the AGA, perhaps a little “awareness” is all consumers need. The letter fails to state the obvious; while it is 100% legal at the federal level for Americans to play online casino games for real money, it is a federal crime for them to visit and bet at an illegal sportsbook.

74 percent of sports betters say it is important to only bet with legal providers, however, 52 percent continue to utilize illegal bookmakers. Most of these consumers (63%) later say they are surprised to learn that they are betting through unregulated and illegal sportsbooks.”

Source: American Gaming Association Urges Department of Justice to Crack Down on Illegal Gambling, AGA, April 14, 2022