Intentionally or not, Michigan has thrown down the gauntlet.
The Michigan Gaming Control Board, in issuing a cease-and-desist letter this week to offshore sportsbook Bovada for offering illegal online gambling, may have set a precedent other states could feel compelled to follow.
At least that may be what the American Gaming Association (AGA) is hoping, as the industry group has lobbied for a federal crackdown on offshore and illegal gaming operators for years.
“The Michigan Gaming Control Board’s decisive action highlights that states have the power to protect their residents from predatory, offshore gambling sites and is another important step in winning the battle against the illegal market,” AGA President and CEO Bill Miller said in a statement on Thursday. “The AGA applauds the MGCB’s leadership against bad actors like Bovada and urges other states to follow Michigan’s lead.”
Since the legalization of sports betting in the U.S., the illegal market has shrunk dramatically from $150B to $64B.
— American Gaming Association (@AmericanGaming) May 21, 2024
AGA CEO @BillMillerAGA shares insights with @washingtonpost into the U.S. gaming industry: https://t.co/nE1cEtJW37 pic.twitter.com/nQQixY1tSC
Miller’s comments come as the AGA — whose members include bet365, DraftKings, and FanDuel, as well as a host of brick-and-mortar gaming operators — has been pushing for some time for the federal government to crack down on offshore gambling sites.
In April 2022, Miller wrote to U.S. Attorney General Merrick Garland and asked for the Department of Justice to make a "strong and meaningful statement" by investigating and indicting the biggest offshore operators, including Bovada.
“This action would provide much-needed clarity that these websites are criminal enterprises, which can help to deter the American public from visiting these sites and prompt businesses to take appropriate action to ensure they are not supporting them,” Miller said.
Bovada is widely available in the U.S. with the exception of only a few states: Nevada, New Jersey, New York, Maryland, and Delaware. But again, for the most part, Bovada, and other offshore operators, are accessible onshore.
That, the AGA found, has helped sow confusion among consumers. According to Miller’s letter, the organization’s research showed that 74% of sports bettors said it was important to only use legal providers, but that 52% were still using illegal ones. Of those bettors, 63% said they were surprised they were using illegal sites.
“Nationwide internet searches for offshore sportsbook brands increased 38% last year, faster than the search growth for legal U.S. operators, and searches for offshore brands represented a majority of all sportsbook searches,” Miller said. “Bovada alone accounts for 50% of all searches.”
What kind of legal action?
The AGA later in 2022 published research estimating that Americans were gambling more than $400 billion a year with illegal and unregulated sports betting and casino sites, shorting states of approximately $4.6 billion in tax revenue in the process.
Interestingly, the AGA said in 2022 that the Justice Department “is the only law enforcement entity that can credibly address these illegal offshore sportsbooks and casinos,” not states.
“While prosecutions and convictions may be difficult to secure, the AGA firmly believes that the Department can make a strong and meaningful statement by investigating and indicting the largest offshore operations that openly violate federal and state laws,” Miller said.
But now it seems the Michigan Gaming Control Board is seeking to send a statement of its own. The regulator said Bovada’s operator, Curaçao-based Harp Media B.V., has two weeks to stop Michigan residents from gambling on its websites or the MGCB will take some sort of “legal action.”
What exactly that action may be remains to be seen. It may not be necessary either, as Bovada has shown it will exit U.S. markets if necessary.
“The proliferation of online gaming platforms has led to increased scrutiny from regulatory bodies worldwide, and this action serves as a stern warning to overseas companies that flouting local regulations will not be tolerated,” MGCB Executive Director Henry Williams said in a press release.
