OFFSHORE GAMBLING
much greater sums into marketing and bonuses. Taking away the one advantage that the legitimate industry has is unlikely to achieve the regulatory aims of high channelization, robust tax revenues and strong consumer protections. Part of the reason for the persistent size of the black market is the presence of so many illegal operators. The Yield Sec report found that whilst there were just over 100 legal online sports betting operators, 860 illegal sports betting operators still target the US market apparently unconstrained. Their position is strengthened by an army of 638 affiliates promoting illegal sites, five times as many as promote legal sites. No taxation without… It is no secret that newly legalized states and land-grab promotions by sportsbooks have brought about sizeable growth in gaming revenues. 2023 was a record-breaking year, the third in succession, witnessing commercial gaming revenues reach a record US$66.66 billion, 10.3 percent higher than 202 . Sports betting revenue was up 46.0 percent from US$7.56 billion in 2022 to US$11.04 billion in 2023 with online accounting for the lion’s share of this amount. The iGaming market also continued its explosive growth in 2023, with combined online casino revenues from six active states reaching US $6.17 billion, a 28.2 percent increase. Whilst land-based continues to deliver the
bulk of the over US$14 billion in taxes paid by the industry, the contribution of online is in excess of US$2 billion and getting larger. Al Capone once boasted, “They can’t collect legal taxes from illegal money.” In his case federal agents proved him wrong, but he would have been correct had he referred to illegal gambling which remains untaxed in the states where customers live. The rates of tax on GGR vary widely by state with further complications when it comes to deductions. But if the profits made from money gambled offshore was taxed at just 15 percent, that would equate to at least an extra US$6 billion in tax revenues. Perhaps to address this perceived shortfall, several states have reviewed or promised to review their tax rates. New York, with an effective tax rate of 51 percent is already making profitable legal gambling in the state practically unachievable. Elsewhere Illinois has switched from a flat 15 percent tax on adjusted gross revenue to a new progressive rate ranging from 20 percent to 40 percent. New Jersey is considering doubling its tax rate to 30 percent and a proposal to boost Massachusetts’ rate from 20 percent to 51 percent failed in May. Just one month after Ohio allowed legal bets, Governor Mike DeWine proposed doubling the tax rate from 10 percent to 20 percent. This was not a revenue-based decision, his office claimed, but designed to send a message to the industry that Ohio intends to take
Offshore operators continue to promote themselves with impunity
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IMGL MAGAZINE | SEPTEMBER 2024
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