Sending cease-and-desist requests to offshore and illegal sports betting operators is one way regulators can try to curb that activity, but it's not the only way.
So suggested several speakers on Monday during one of the opening panels of the Global Gaming Expo, or G2E, at the Venetian Expo in Las Vegas.
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Andrew Rhodes, CEO of the U.K. Gambling Commission — which some states see as a source of insight and experience given the much more mature online gambling market overseas — said cease-and-desist letters form part of their process for addressing illegal activity.
The Gambling Commission can use the C&D as proof that someone has been told they are operating illicitly and take that notice to internet service providers (ISPs) to lobby them to block traffic to a site. And then, if necessary, the commission can show the letter to the judge in arguing for a court order.
Those letters, Rhodes said, are part of the process to demonstrate the Gambling Commission has exhausted all avenues for trying to get an illegal operator to knock it off.
“The really virulent offshore operators, they couldn’t care less about our cease-and-desist letters, but the courts and ISPs do,” Rhodes said.
Kirk Hendrick, chairman of the Nevada Gaming Control Board, highlighted a "good" trend, which is that more legalized states provides more allies and help with oversight. Can share information, insights, etc.
— Geoff Zochodne (@GeoffZochodne) October 7, 2024
Rhodes and the commission are also trying to make it as difficult as possible for illegal operators to do business “at scale,” including by gaining the cooperation of other parties such as ISPs, payment processors, and search engines.
Nevada Gaming Control Board chairman Kirk Hendrick said some offshore operators will make “coasters” of cease-and-desist letters.
“They’re like ‘Come get me, that’s why I’m in Costa Rica,’” Hendrick said.
That is where the federal government could play a role, and state regulators have asked for help there, Hendrick noted. Then international partners may be looped in as well to go after entities that do not always restrict their activities to illegal gambling.
“To be sure that if illegals can’t be shut down, how are we going to protect and serve those that are doing it right,” Hendrick explained.
Getting creative
Even so, when offshore operators use onshore resources, there are vulnerabilities. Hendrick recalled the case of an offshore operator using flesh-and-blood dealers in Las Vegas without being licensed. The Nevada regulator issued a cease-and-desist letter and those games were shut down.
Dennis Mullen, general counsel and acting executive director of the Indiana Gaming Commission, said they have issued cease-and-desist letters in cases, but added it can be difficult to measure the effectiveness of such a tactic.
A more effective route, Mullen suggested, is like the one Rhodes mentioned. That means going after illegal operators via conversations with onshore advertisers, data-center providers, payment processors, and similarly “risk-averse” parties that want to remain in the good books of regulators.
“I think those are all good ways of attacking the problem creatively,” Mullen said.
Different regulatory strokes
While some state regulators have not been shy about issuing cease-and-desist letters to certain operators located abroad, Illinois, one of the larger U.S. sports betting markets, has not. Instead, Illinois Gaming Board administrator Marcus Fruchter hinted Monday that the regulator may have other irons in the fire.
“I think each regulator has different jurisdictional limitations and territorial restrictions,” Fruchter said. “Our statute gives me jurisdiction over certain people and certain operators and that’s where we can focus our efforts.”
Fruchter added that the IGB is in communication with other regulators and law enforcement agencies and suggested there is work that can be done there, but declined to go into detail.
Supply and then a demand
The comments come as numerous state regulators have sent cease-and-desist letters to offshore gambling companies that the watchdogs believe are operating illegally on their turf. Bovada has been a frequent target, and the Curacao-based sports betting and casino gambling site now restricts access to customers in more than a dozen states in the wake of that correspondence.
That crackdown seems likely to continue. Just last week, the Michigan Gaming Control Board announced it had sent cease-and-desist letters to companies based in Costa Rica and Israel over alleged illegal gambling activities.
The MGCB has also suggested that any offshore operator that decides against ceasing and desisting could find their onshore vendors targeted, similar to what some of the G2E panelists said.
“Certainly, any business relationship with an illegal operator will very likely prevent a company from being licensed to do business in the very large Michigan gaming market,” MGCB public information officer Lisa Keith told Covers earlier this year, right after the regulator sent Bovada a cease-and-desist notice. “With this letter, we have made a clear statement that Bovada is violating Michigan laws. If Bovada fails to comply with the letter, we would strongly encourage any advertisers, affiliate marketers, payment processors, and other business partners of Bovada to sever ties to avoid potential licensing or legal consequences.”
