The American Gaming Association recently asked the United States Justice Department to flex more legal muscle on illegal gaming operations doing business in the country.
In a three-page letter addressed to Attorney General Merrick Garland, the AGA stated the “brazen and coordinated matter” of online outfits and other entities have elevated the threat to American consumers using their services.
Offshore sites such as MyBookie, BetOnline and Bovada were referenced, as were warnings about “skill-based” machine makers.
“We urge the Department to make it a priority to act … to protect American consumers, crack down on illegal operators, and enforce federal regulations,” AGA President and CEO Bill Miller wrote.
AGA says it wants to protect its members, consumers
Chris Cylke, AGA’s senior vice president of government relations, told PlayMichigan that issues such as responsible gaming and compliance tend to unite its members. That’s not easy in a highly-competitive industry where not everyone agrees on everything.
There are about 80 AGA members from across the gaming industry. That includes large casino gaming operators, native online gaming platforms, sports betting sites, slot-machine makers and more.
The association meets throughout the year to decide which efforts to focus on to best represent the industry’s interests.
Cylke said the justice department letter wasn’t inspired by any one specific event, but rather part of its ongoing commitment to transition into fully legal marketplaces.
“I think this letter was really intended to target some of the top brass at DOJ to really put some emphasis behind the need to get serious about using their enforcement authority to go more aggressively after the illegal gambling market,” Cylke said.
Offshore sites: Legal or not legal or what?
Defining the legality of offshore operators to the general public can be difficult. Take Bovada, one of the companies highlighted in the AGA communication. Bovada runs its own Twitter account displaying bonus offers and sports jokes like any other regulated platform.
A Google search inquiring about the Bovada legal status basically tells consumers: You’re good to go in most states. Bovada’s terms of service includes a link showing it’s been licensed by the Government of Curaçao since 1996. So, legal or not?
“They’re illegal because they’re not licensed to operate in any state in the country,” Cylke said. “And they’re also, you know, in violation of a variety of federal laws.”
Cylke said since they operate outside of the country’s law, it makes enforcement difficult unless one of the site’s officers steps foot on U.S. soil.
“Our message in the letter to DOJ was, even having something that’s less than a conviction, having an indictment or taking some other kind of official government action that would send the message that these are bad actors who are in violation of the law, would be helpful to educating the general public,” Cylke said.
Why would someone use an illegal site anyway?
PlayMichigan talked with an individual who has been involved in legal and illegal gambling operations. That includes running their own offshore betting site and accepting real-life bets as a bookie. We will refer to them as “Paul” to protect their identity.
We asked Paul why people may choose to risk wagering money on an offshore site. They gave a variety of reasons through text messages:
- Credit and/or debit cards are used at legal sites. That opens the possibility of a significant other having easy access to find out how much money is being wagered.
- Winnings from a legal site are taxed.
- Having to deposit money up front into legal sportsbooks, while a local bookie may offer a person “credit.”
The case for regulated gaming
When asked how the AGA may respond to those reasons, Cylke said they won’t be able to reach everybody.
“I mean, I guess those are the same people that would buy illegal cigarettes out of the back of a truck that’s going down the road,” Cylke said.
Cylke said that while there is an obvious competitive element to the AGA’s stance, it’s really about protecting American consumers and keeping the U.S. gaming industry regulated and fair. And not just for online operations, but with items like unregulated skill machines.
Think of a slot machine one may find in the back an old bar or something similar. Cylke described 7-11 gas stations in Virginia, where he sees machines like that all over, often populated by people who look like they’ve been there for hours.
“It’s a stark contrast to the highly-regulated environment that we have where you have people who are trained to recognize problem gambling and intervene if people are getting out over their financials,” Cylke said.
He said some states have thousands of said machines, but credited Michigan’s efforts to combat them.
“I think we have to give some credit to the state of Michigan, where the regulator there has really made it a priority to try to crack down on these unregulated gambling machines,” Cylke said.
Michigan cracking down on illegal operations
In March, the Michigan Gaming Control Board announced its assistance with Lansing police and the attorney general’s office with raids at two alleged storefront casinos in the city. The raids resulted in the seizure of more than $91,000 and 80-plus machines.
MGCB spokesperson Mary Kay Bean said the Lansing locations were part of three raids that have occurred since internet gaming and sports betting was authorized by the state in January of 2021.
“The MGCB works with the Michigan Department of Attorney General on investigations, and the department pursues warrants, charges and prosecution of alleged illegal gambling cases,” Bean wrote in an email to PlayMichigan.
The gaming board offers its expertise in gaming to help aid law enforcement as it considers illegal gaming a threat to Michigan consumers.
“The MGCB is aware of illegal offshore activity, and we believe the legal, regulated market in Michigan is a deterrent to illegal operators,” Bean said. “Like the AGA, the MGCB considers illegal gambling a serious issue for the U.S.”
Bean said the MGCB encourages the public to submit tips about suspected illegal gambling. Tips made on the agency’s website and by phone at (888)-314-2682 can remain anonymous. Information sent by direct email to [email protected] are not anonymous.
Legal gaming benefits states in different ways
Legal gaming operations don’t just benefit consumers who play. Cylke pointed out that offshore operations also take money away from programs that receive funds from regulated markets.
Michigan has brought in hundreds of millions in tax revenue since legalizing online gambling in January of 2021. Online casinos have generated more than $360 million in tax dollars for state and local governments.
Sports betting has generated more than $19 million in taxes for state, local and tribal governments.
That tax revenue is meant to fund a variety of public services, including education and economic development. Detroit Mayor Mike Duggan has already credited online gaming for helping to offset pandemic losses for the city.
Those tax dollars also help fund programs in other states that help veterans or help reverse homelessness, Cylke added.
Regulated markets provide safeguards for bettors
Cylke said legal, regulated markets also provide well-researched safety measures for people who may have addiction issues. All reasons why the AGA says illegal gaming poses a serious threat to consumers.
Regulated operators provide a number of safeguards for bettors. Within their apps, customers can create their own time or monetary limits. Legal operators also honor self-exclusion programs and provide resources to assist in treating problem gambling.
The legalization of online gambling in Michigan has led to more calls to the problem gambling hotline for a variety of reasons. But reaching out for help is easier to do when the activity that’s led to addiction is a legal one.
Legal operators also work to protect the integrity of games. Take, for instance, the case of Atlanta Falcons receiver Calvin Ridley. He placed a wager (on a Falcons game) on a legal app in Florida. The operator of the app flagged the wager. That flagging and discovery would not have take place with an illegal or offshore account.
“It’s not only an economic kind of threat to us, but it’s also a consumer protection threat as well, having these illegal channels kind of being able to operate in the open,” Cylke said.