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U.S. Gaming, Lottery Industries Under Threat From Unregulated Gambling

December 12, 2022
Illegal gambling in the United States has expanded to the point where unregulated slot machines and offshore sports betting and casino websites are a direct threat to the legal gaming and lottery markets, according to leading industry officials.


Illegal gambling in the United States has expanded to the point where unregulated slot machines and offshore sports betting and casino websites are a direct threat to the legal gaming and lottery markets, according to leading industry officials.

“We talk about the illegal market through two different pieces,” said Bill Miller, president and CEO of the American Gaming Association (AGA). “One is the offshore online websites that are readily available for anyone with a smartphone and two are the grey machines that have proliferated throughout the country.”

Miller said the machines look, feel and act just like a slot machine except for the fact that they are not regulated, they are not taxed, and they do not offer any consumer protections.

“So, we know that the unregulated market creates a direct threat to our industry and … quite frankly the largest threat,” Miller said in a speech on Friday (December 9) to attendees of the National Council of Legislators from Gaming States (NCLGS) winter meeting in Las Vegas.

Miller also reassured the gathering of lawmakers and state gaming regulators that federal and state law enforcement agencies have been very responsive to the AGA asking for an increased level of enforcement against grey-market machines.

“The argument to U.S. attorneys, and there are 93 of them across the country, is that they have pretty wide prosecutorial authority. For the rank and file bad guy, they can go after them,” he added. “We want them, we need them to do that.”

“My goal in the coming months is to get indictments,” Miller said.

Sarah Taylor, executive director of the Hoosier Lottery, said many of her industry colleagues are very concerned about the threat that unregulated gaming devices pose to state lotteries and are collecting and sharing information about the expansion of these machines found in convenience stores, bars and gas stations.

“Eventually, lotteries are advocating to our state houses about their concerns and what can be done,” Taylor said Friday during a discussion on the lottery industry.

Matt Strawn, CEO of the Iowa Lottery, urged lottery officials to develop best practices to deal with the machines that are either coming to their states or are already there. He suggested talking with a lottery’s revenue director “because it will impact your state revenue.”

“Talk to your attorney general,” Strawn said. “We are competitors, but we all collaborate on issues.”

Miller has now taken the AGA campaign to eliminate the illegal market on the road this year to Atlantic City, Mississippi and to the Global Gaming Expo (G2E) and NCLGS in Las Vegas.

On Friday, he warned that what illegal operators are looking for is to become “so annoying that you and your state legislatures will just decide that they are already here, we can’t get rid of them, so we are just going to wave a magic wand and legalize them in the same way we legalized the rest of the industry.”

“I think that is dead wrong. So an indictment will make it very difficult for someone who lives in that grey market to get licensed. We want to make these people unfit because we think they are unfit.”

During his keynote speech, Miller also took aim at the New York Times' recent series of articles examining the sports-betting industry’s lobbying practices, college partnerships and supposed regulatory shortcomings.

The New York Times report claimed the gambling industry used “dubious data to push to legalize sports betting” and that, upon analysis, the projections of tax revenues offered to state legislators in the pursuit of legalization were “wildly optimistic.”

“We looked at the New York Times when they came knocking on our door about eight or nine months ago,” Miller said. “Look at these hostiles, they have an agenda. They have decided what they are going to write.”

The question was, Miller said, should the AGA engage with them or not.

“My strong view was it was important for us to engage them. It was important for us to have conversations, do everything we can to separate fact from fiction.”

But if investigative reporters truly believe that lobbying legislators to the benefit of an industry is some shocking thing, Miller said he would send them a copy of School House Rocks’ I’m Just a Bill cartoon.

“Another thing that was remarkable in the 17,000 words that were written was that they really just ignore the strict regulatory framework that we have,” said Miller, who spent 13 years as the lobbying director with the U.S. Chamber of Commerce prior to joining the AGA.

Miller also expressed his frustration about the social and economic benefits that gaming provides and other good works that were not considered by the New York Times.

“I think that there is an important reason that the editor dropped all five stories on the Sunday before Thanksgiving because notwithstanding the reporters who believe they found an amazing story about lobbying legislators in state capitals, and they deserve a Pulitzer Prize … that editor dumped all five stories because they didn’t believe anyone would win a Pulitzer Prize and that they didn’t believe quite frankly that there was anything interesting.”

Still, Miller told attendees that it was incumbent upon the gaming industry to look at what vulnerabilities it has collectively.

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