Following the publication of the latest data set (at the time of writing), which demonstrated that the gaming industry significantly outpaced expectations through 2022, American Gaming Association President and CEO Bill Miller spoke in depth regarding the fight against an illegal ecosystem that is said to be “firmly entrenched in the US”.
Despite acknowledging progress made thus far, the AGA, which has been and remains vociferous when addressing the illegal and unregulated industry, is under no illusions as to the size and complex nature of the path that lies ahead.
“Offshore sportsbooks and casino websites have been targeting American consumers for decades and unregulated machines are rampant across the country,” it was explained.
“Our research shows that Americans wager more than half a trillion dollars in the illegal market annually, demonstrating the massive scope of this issue.”
“Eradicating a problem of this magnitude is certainly complex and made even more challenging by the lack of transparency of the illegal marketplace. Even though this is a complicated issue, the AGA is chipping away at the illegal market every day.”
“We’re working with Congress to ensure law enforcement prioritizes investigation and prosecutions; engaging state attorneys general and US attorneys on how bad actors flout the law; weighing in with state legislatures to strengthen laws and close loopholes; and working with private sector stakeholders to shut off platforms for illegal gambling operations.”
The issue, emphasized Miller, is one that affects individuals across all regions of the US, not just those that may have adopted regulated forms of gambling.
“Offshore websites and online sportsbooks disguised as daily fantasy sites are available to anyone with access to the internet, and ‘skill’ machines are available in gas stations, convenience stores and taverns in many states,” he said.
He added that those actors that occupy a space within the unlawful, illicit ecosystem are increasingly becoming “adept at taking advantage” of both the growth of legal gaming and attracting “unsuspecting customers who believe they are playing legally.”
“Before the illegal market expands any further, it is incumbent upon all levels of government and law enforcement to take action to eliminate this threat to consumers,” he warned.
However, despite refusing to get complacent regarding any perceived level of progress in trying to drive down unlicensed, unauthorized and unsanctioned operators further still, he suggested that “we’re beginning to see the fruits of our labor”.
Citing an “impressive migration” of activity away from illegal operators, Miller referred to research that suggests a drop in revenue. This, he explained, has seen a one-time $150B annual illegal sports betting industry, before the invalidation of PASPA, fall to approximately $64B during the last year.
“But there is still more to be done. This is a fight we are in for the long haul and something that is crucial for the future of the legal gaming industry,” he reiterated, while reinforcing the point, that every stakeholder within the gaming ecosystem has a part to play in ending illegal activities.
Miller, who has previously described the illegal market as a “scourge on our society”, was also quizzed on what needs to change, or be maintained, to ensure its constant eradication. By way of a response, he issued a plea to lawmakers to help lessen the influence of illegal actors.
“Policymakers and regulators must close loopholes that erode regulations and permit unnecessary consumer risk and create competitive regulatory frameworks for the legal market,” he said.
“Businesses must actively monitor for and remove access to illegal websites and unregulated games. Third parties like payment processors, media and tech companies must stop providing a platform for bad actors to conduct business.
“And finally, federal, state and local law enforcement must aggressively go after bad actors and enforce the laws already in place. We are encouraged by the recent crackdowns on unregulated machines we’ve seen in places like Michigan, Missouri, South Carolina and others. We’ve also seen law enforcement officials publicly denounce illegal online gambling.”
Citing one particular example in backing up this aforementioned point, Miller turned his attention to the National Football League’s Super Bowl showpiece, and action taken ahead of the Grand Canyon State held spectacle.
Here, Arizona Attorney General Kris Mayes issued a consumer alert to all interested parties that call on sports fans to only wager utilizing legalized betting options, in addition to warning of the myriad of dangers that can go hand-in-hand with ignoring such a plea.
Among the tips offered by Mayers regarding online sports bets in Arizona, was an urge to observe an Arizona Department of Gaming list of approved operators as well as a rundown of approved events and wagers.
It was also reminded that many illegal sportsbook companies are outside the US, and could leave consumers with no possible course of action in the event of a dispute, and that if a deal seems too good to be true, it probably is.
Mayes also elaborated on what illegal offerings could lack, which included key facets of an operation such as testing to ensure compliance with regulatory standards designed to guarantee fair play, oversight to ensure consumers are paid their winnings, security standards to protect personal and financial information and compliance with anti-money laundering law.
Amid such a high-profile plea to all football fans to use only legal sports betting, the AGA acknowledged much hope of witnessing an increase in similar such law enforcement action in the space moving forward.
“Even without convictions of these operators, action from all these stakeholders can go a long way toward educating the public about the dangers of unregulated gambling and putting everyone on notice that it’s not okay to support the illegal market in any way,” he said.
Earlier in the year, it was revealed that US commercial gaming revenue toppled the $60B barrier for the first time, and in the process smashed a previous record of $53B that was set one year earlier.
According to the AGA’s commercial gaming revenue tracker, the $60.4B figure was aided by an “all-time high” quarterly revenue of almost $15.9B that was gained through Q4.
Sports betting and igaming each marked single-quarter highs, with traditional gaming growing 1.7% year-on-year. Retail gaming comprised 80.5% of the overall figure, with online gaming soaring to a best performance by accounting for the remaining 19.5%.
With US commercial gaming soaring above the highs previously experienced, Miller looked at how much these figures could potentially grow should the illegal sector experience a decline in impact and influence.
“AGA research indicates that illegal gambling cost the regulated industry more than $44B in gaming revenue last year,” he explained.
“With combined commercial and tribal gaming revenue set to hit $100B in 2022 when tribal numbers are reported, this means that illegal gambling revenue equates to nearly half the amount generated by legal operators.
“It would be unheard of in any other industry for nearly half of a market to be captured by illegal or unregulated operators. And we’re not going to let it stand here.
“However, this is about more than how unregulated gambling impacts the legal industry’s bottom line.
“Illegal gambling with offshore websites, bookies and unregulated machines costs communities an estimated $13.3B in taxes annually. States could more than double their gaming tax revenue – which stood at $11.7B in 2021 – by addressing the illegal market.”
As the conversation drew to a close, Miller concluded by looking at what major highlights will be reflected upon across US commercial gaming in 12 months’ time.
He explained: “Illegal and unregulated gambling is a major threat to our industry and combatting it will continue to be a top priority for the AGA throughout 2023.
“When the legal gaming industry does well, our communities thrive and state and tribal budgets grow, unlike illegal operators that only pad their own pockets. We are leaving no stone unturned when it comes to this fight.
“Beyond combating the illegal market, I am optimistic that 2023 will be another strong year for the commercial gaming industry, building on the record $60B in revenue last year.
“Casino gaming has shown impressive resiliency and sustained consumer demand in the face of recent economic uncertainty. Even though macroeconomic concerns remain, we are confident in the strength of our industry as we navigate 2023.
“Lastly, we are expecting 2023 to bring new ways for our industry to raise the bar on responsible gaming. We’ve seen major strides in this area in recent years, but there’s always more we can do.
“The AGA is doing our part by convening the industry, regulators, advocates and key stakeholders in a discussion around evolving responsible gaming for the modern era of gaming.
“Responsibility is the core of the US gaming industry and ensuring we do not become stagnant in this area is key to ensuring our industry’s long-term success.”