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Despite active enforcement efforts against offshore gambling websites, state gaming regulators and law enforcement officials believe it requires assistance from the U.S. federal government to effectively address a multi-billion-dollar problem.
“Illegal gambling operators are thriving at the expense of American consumers, siphoning billions in tax revenue from state governments, and undercutting the efforts of the legal market,” said Bill Miller, president and CEO of the American Gaming Association (AGA).
A recent analysis from the AGA found that Americans wager a total of $673.6bn annually with illegal and unregulated operators, a figure that has risen by 22 percent since the trade association’s last report in 2022.
The AGA attributed the increase to a sharp rise in illegal iGaming and sports betting, and the expansion of unregulated skill-game machines in convenience stores nationwide. Overall, illegal operators account for 31.9 percent of the total U.S. gaming market.
The illegal and unregulated offshore gambling market was estimated to generate $53.9bn in annual revenue, costing state governments $15.3bn in taxes each year, according to the survey conducted by The Innovation Group on behalf of the AGA.
Miller stressed that taking on the illegal market not only requires stronger U.S. enforcement but also “continuing to work closely with our international partners to shut down offshore operators and hold them accountable.”
Will "Black Friday" Happen Again?
Miller’s comments and the latest AGA illegal gambling market survey was released amid increased pressure from U.S. attorneys general, and state gaming regulators for the U.S. Department of Justice to use “Black Friday” as a guide for further crackdowns on offshore internet gambling operators.
On April 15, 2011, three of the largest online poker sites were seized and shut down by the U.S. Department of Justice in a federal operation known as “Black Friday.”
At the time, the FBI blocked the domains of Full Tilt Poker, PokerStars and Absolute Poker and the operators were charged with illegal online gambling, as well as bank fraud and money laundering.
In the subsequent months, the Justice Department seized at least a dozen gambling websites, including Bookmaker.com and Doylesroom.com.
“They had real results coming out of that,” Tres York, vice-president of government relations with the AGA, said during a recent webinar hosted by the Indian Gaming Association. “This is something the DOJ has done before. We want them to do it again.”
More than 14 years later, a bipartisan group of 50 U.S. attorneys general believe it’s time for another “Black Friday” crackdown to prevent thousands of U.S. residents from depositing money and playing on illegal sites with names like Bovada, Xbet Casino and VGW Luckyland.
“Regulations on gaming exist to ensure the industry’s economic activity is safe and non-predatory,” Nevada attorney general Aaron Ford, a co-signer of the letter to the DOJ, said in a statement.
Ford added that Nevada has benefited from an important and ongoing dialogue between the public and private sector, where illegal online gaming acts outside of this industry. Nevada remains the largest gaming state in the U.S., generating $15.61bn in revenue last year, and $7.7bn through June 30, according to the Nevada Gaming Control Board.
To protect the state’s largest industry, lawmakers approved Senate Bill 256, which increased penalties for illegal online gambling operators.
The bill, which is effective October 1, requires any operators found to have operated illegally in Nevada to disgorge all earnings, and allows state courts to impose stiffer fines beyond the current $50,000 fine illegal operators face for violating the state’s gaming laws.
“This shouldn’t be a controversial issue,” York said, adding that the letter sent to the DOJ highlights that “this is a major problem.”
”Hopefully, we will see some real results out of this,” York remarked. “The scrutiny is growing. We are going to continue to work on raising awareness.”
Michigan Gaming Control Board (MGCB) spokeswoman Lisa Keith, agreed, saying federal involvement can be a valuable tool in addressing illegal, unregulated offshore gambling operators, especially given their ability to operate across state and national borders.
"We are hopeful that continued coordination between state and federal authorities will enhance enforcement," Keith told Vixio GamblingCompliance on Monday (August 18).
Crackdown On Unlicensed Online Gambling
Connecticut attorney general William Tong, a co-signer of the letter to the DOJ, blamed lax federal enforcement for enabling illegal offshore gaming and sports betting to proliferate, leaving state agencies to deal with the never-ending issue.
Since February 2024, the Connecticut Department of Consumer Protection (DCP) has sent cease-and-desist letters to Bovada and VGW, a sweepstakes operator, ordering them to cease offering games to Connecticut customers.
In May, the DCP announced a $1.5m settlement with High5Games following an investigation into the licensee’s operation of an unlicensed online casino, High5Casino. High5Games continues to be a licensed service provider that developed and provided online slot content for the legal gaming platforms in the state.
On Friday, the MGCB issued an additional 15 cease-and-desist letters targeting offshore casino and sports betting websites, including Vegas Casino Online and 7 Bit Casino. The agency has been extremely aggressive in trying to block illegal operators from its regulated market.
Since the MGCB’s campaign began in January 2024, the agency has issued more than 100 cease-and-desist letters to illegal, offshore gambling websites.
“Our cease-and-desist letters are an important enforcement tool to stop illegal gambling activity from reaching Michigan residents,” Keith told Vixio in an email.
“Since beginning this initiative, we’ve seen a strong compliance rate from the companies contacted—many have voluntarily ceased offering their services in Michigan following receipt of our letters,” Keith added. “In some cases, follow-up action has been necessary, and we continue to monitor and investigate operators to ensure compliance.”
While offshore and unregulated sites can be challenging to track, Keith said, each successful action helps safeguard consumers, ensures a fair marketplace for licensed operators, and reinforces that illegal gambling will not be tolerated in Michigan.
Connecticut and Michigan are two of five states with legal iGaming to take enforcement action against offshore, online casino and sweepstakes sites, while 11 non-iGaming states have targeted the illegal operators with cease-and-desist orders, according to data compiled by Vixio.
Other states attorneys general and gaming regulators have been active in going after unregulated offshore gambling sites. The Arizona Department of Gaming issued four cease-and-desist letters on Friday targeting event wagering sportsbook sites Fliff and Thrillzz, and sweepstakes sites BettySweeps Casino and Pulsz Casino.
BetOnline and Sportsbetting.ag both exited Massachusetts after attorney general Andrea Joy Campbell issued cease-and-desist letters notifying the companies they were operating without a state gaming license.
Campbell was another co-signer of the letter seeking assistance from the DOJ in protecting their residents and the state’s legal and regulated gaming industry.
Meanwhile, the Louisiana Gaming Control Board (LGCB) and Mississippi Gaming Commission (MGC) have also targeted both sweepstakes-based operators and unlicensed online gambling platforms.
Regulators in Louisiana revealed in June that they had issued 40 cease-and-desist letters to a wide-range of offshore operators. The LGCB stressed that these illegal operators undermined the state’s regulated market.
In addition, the MGC issued multiple cease-and-desist letters to BetOnline, Bovada and Chumba Casino.
York praised the action of state agencies but said the toolkit used to go after these businesses is different from what the federal government can offer. He noted that the federal government has the technical expertise to seize website domains, which is something states can’t do.
