The American Gaming Association has called on state regulators to get tough with unlicensed sweepstakes and gaming operators that are operating unfettered in the American gaming market.
Zero Tolerance
Sports betting has caught fire in the United States since the U.S. Supreme Court overturned PASPA in 2018, paving the way for states to decide for themselves whether they will legalize, regulate, and tax retail and mobile sportsbook operators. So far, 38 U.S. jurisdictions offer sports betting in some fashion, whether retail, mobile, or both.
All those states exact a tax on those operators but the offshore market is still alive and well, operating outside the legal purview of state regulators. Some of those gaming companies are actual sportsbooks while others operate as sweepstakes operators, charging for tokens that can be turned into cash for prizes.
It is a thinly veiled attempt to skirt U.S. gaming laws and the American Gaming Association (AGA) believes something needs to be done. The AGA has been unrelenting in its pursuit of state and federal protection for U.S. licensed sportsbook operators paying the taxes that those outside the country do not.
A recent AGA memo to regulators said, “Gaming regulators and state attorneys general should investigate companies or platforms that offer casino games or a form of sports betting under the ‘sweepstakes’ model to determine whether or not these operators are in compliance with their respective laws and regulations and take appropriate action if not.”
Not only do these foreign actors operate without paying taxes to the U.S. but neither are they regulated which can pose a threat to Americans on many levels.
“The lack of regulatory oversight presents many risks for consumers as well as the integrity and economic benefits of the legal gaming market through investment and tax contributions,” the AGA said.
Michigan Remains Vigilant
Michigan is one of only seven states that not only offers mobile sports betting but online casino gambling, also known as iGaming, as well. It has been proactive in protecting the gaming industry, understanding that any business flowing to offshore operators is money out of the pockets of its operators and, by default, the state itself from those missing revenues.
To that end, Michigan regulators issued cease-and-desist letters to PredictionStrike, Stake.us, and VGW earlier this year. Michigan Gaming Control Board (MGCB) Executive Director Henry Williams said, “Gambling regulations are in place for a reason, and illegal gambling operations are not welcome in Michigan.”
“We do not want businesses who skirt the law having access to Michigan citizens and leaving them vulnerable because they are playing on unregulated sites that leave them with no recourse, and that siphon funds away from communities because they are not paying taxes like a regulated, legal gambling establishment would.”
But that wasn’t the last cease-and-desist letter the MGCB authored. The regulatory agency stated that Bovada, one of the industry’s most popular offshore sports betting sites, was in violation of the Lawful Internet Gaming Act, the Michigan Gaming Control and Revenue Act, and the Michigan Penal Code.
Bovada has subsequently withdrawn from the Michigan market and more offshore sites could be in Michigan’s crosshairs. Naturally, the AGA applauded Michigan’s proactive approach which was also taken by regulators in Colorado.
“Successful enforcement actions against Bovada by Michigan and Colorado are proof that states have tools to fight back against offshore operators and should serve as blueprints for other states to follow,” said the American Gaming Association SVP of Government Relations, Chris Cylke, in a statement.
