June 19, 2024 3 min read

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Fact-checked by Stoyan Todorov

How Illegal Gaming Operations Undermine the Legal Industry in the US

Consumer education is crucial in highlighting the dangers of illegal gaming platforms, as these unregulated entities pose significant risks to personal and financial data

Chris Cylke, vice president of government relations at the American Gaming Association (AGA), has pointed out that attractive promotions, better odds, and the ability to gamble with cryptocurrencies are some of the things that lure people into illegal gaming.

Different aspects are included in illegal gaming such as offshore online casinos, unregulated slot machines and illicit sportsbooks. These hidden activities present significant threats to customers and undermine the legal gambling sector.

However, Cylke further noted how important it is to educate consumers about the risks associated with these illegal platforms, reported local media outlet Vegas Inc. According to him, illegal gambling is not a victimless crime as many believe. Users may expose their personal and financial details to unregulated entities which could be located anywhere since there is no oversight over them and customers do not know where their money ends up.

Legalized operators face stiff competition from such illicit operations which do not incur costs like getting licenses or paying taxes. In 2022 alone, reports indicate that illegal betting houses took in more than $510 billion worth of bets while legal establishments lost over $44 billion due to this unfair competition. The legalization of sports betting in numerous jurisdictions in the US has led to a decrease in illegal sports betting, but online casino gaming remains a major issue, with over $337 billion transacted illegally.

Illegal Sports Betting: A $13.3 Billion Tax Drain

Cylke reiterated on consumer education saying that sometimes individuals unknowingly visit sites considered illegal because they appear prominently on search engines. He further stated that some users knowingly choose these sites to avoid scrutiny, a practice that further complicates the problem.

Alan Feldman who is UNLV’s director of strategic initiatives highlighted the absence of consumer protection safeguards found within unauthorized gaming websites together with the fact that they do not pay taxes and thus deprive state coffers of revenues meant for local economies. An AGA report also pointed out that state governments lost $13.3 billion in tax revenue due to illegal and unregulated sports betting.

Feldman called upon all US states where gambling has been legalized to acknowledge the damage caused by unlicensed gambling establishments arguing that legalization of sports betting was primarily done with an aim to generate additional tax dollars for public use. Additionally, he mentioned that people affected negatively by illegal gambling rarely come forward thereby complicating matters even further.

To fight against the illegal gaming industry leaders are calling for stricter law enforcement coupled with creating awareness among the general public. Feldman cited Nevada as an example where they have employed GeoComply technology among others which help to identify and block unauthorized betting activities whilst Cylke commended the Michigan state government’s move of issuing cease-and-desist letters to major illegal sites.

Author

Silvia has dabbled in all sorts of writing – from content writing for social media to movie scripts. She has a Bachelor's in Screenwriting and experience in marketing and producing documentary films. With her background as a customer support agent within the gambling industry, she brings valuable insight to the Gambling News writers’ team.

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