State Gaming Regulators Seek Federal Crackdown On Offshore Sites

May 5, 2023
A coalition of seven state gaming regulatory bodies has asked the U.S. Department of Justice to prioritize targeting illegal, offshore sportsbooks and online casinos, according to a letter released on Thursday.


A coalition of seven state gaming regulatory bodies has asked the U.S. Department of Justice to prioritize targeting illegal, offshore sportsbooks and online casinos, according to a letter released on Thursday (May 4).

Dan Hartman, director of the Colorado Division of Gaming, and his counterparts at six other state regulatory agencies, asked U.S. Attorney General Merrick Garland to address the significant threats posed by offshore illegal gambling that state regulators cannot deal with alone.

“Because of the nature of illegal gaming, it will take a combined effort between states and the federal government to combat,” Hartman told VIXIO GamblingCompliance. “However, the Department of Justice [DOJ] is best equipped with the legal tools to combat the illegal offshore sportsbooks and gambling sites.”

The other state regulators signing the letter were from Nevada, New Jersey, Michigan, Illinois, Louisiana and Mississippi.

“States with legalized gaming have gone to great lengths, through robust gaming laws and regulations, to ensure that each state can protect its citizens and regulate gaming in an efficient, effective manner,” the regulators wrote in their two-page letter dated April 28.

“Gaming licenses are a privilege, and the role regulators play in this area is foundational to gaming integrity and consumer confidence. Offshore operators who offer their products into these highly-regulated state jurisdictions are doing so in contravention of not only state laws, but federal law.”

Michigan Gaming Control Board executive director Henry Williams said his agency was willing to help the DOJ in any way it can as the federal government pursues enforcement of U.S. laws against illegal operators.

“Offshore operators flaunt state regulations and offer products that do not protect the public, which greatly concerns me and my fellow regulators,” Williams said in a statement.

In the letter, Hartman and his colleagues noted the dangers posed by illegal offshore sites, such as lack of investment in responsible gaming programs, no age verification requirements to protect minors, and no controls to prevent money laundering.

They also cautioned that illegal sites offer no guarantees of fair payouts for customers, as well as the loss of state tax revenue that funds important programs like education.

“We understand and appreciate the fact that the [DOJ’s] jurisdictional responsibilities are broad and, consequently, priorities vary over time,” the letter stated. “However, the many significant threats posed by offshore illegal gambling cannot be addressed by states alone and, therefore, require heightened federal attention and engagement.”

Nevada Gaming Control Board chairman Kirk Hendrick sent the letter to the Justice Department. The DOJ was unavailable for comment on Thursday.

“The Nevada Gaming Control Board routinely works with local, state and federal law enforcement agencies to prevent and prosecute illegal gambling activity,” Hendrick said.

The correspondence to the attorney general, Hendrick said, “requests the U.S. Department of Justice to utilize its unique resources to assist state gaming regulators in investigating and prosecuting criminal activity beyond the states’ borders.”

The letter from state regulators comes nearly a year after American Gaming Association (AGA) president and CEO Bill Miller sent a similar notice to the U.S. Attorney General urging the DOJ to accelerate efforts to crack down on unregulated, offshore sportsbooks and casino sites.

On November 30, the AGA also issued a report that found Americans still spend an estimated $511bn annually gambling via unregulated sportsbooks, offshore websites and so-called skill-based gaming devices, despite the more widespread availability of legal sports wagering since the U.S. Supreme Court ruling of May 2018.

In addition to Americans gambling more than half a trillion dollars illegally each year, the AGA report found illegal and unregulated gambling costs state governments $13.3bn in annual tax revenue, compared with legal operators who contributed $11.7bn to state coffers in 2021.

“Illegal gambling is a major issue that affects all 50 states and D.C., and it’s incumbent upon every level of government and law enforcement to take action,” Chris Cylke, the AGA’s senior vice president of government relations, told VIXIO on Thursday.

“While the federal government is ultimately best positioned to crack down on offshore gambling websites because of their experience navigating jurisdictional issues and the resources they have at their disposal, states can also play a role.”

Cylke said the AGA appreciated the continued leadership of the regulator coalition, and “would look forward to working together to combat these bad actors.”

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