OFFSHORE GAMBLING
regulation seriously and would not allow a wild west to emerge in sports betting. On top of state taxes, the federal government collects 25 cents for every US$100 wagered on sports. When the average payout rate is 91 percent or more, this takes an especially big toll because operators are paying tax regardless of whether the house wins or loses. This has led some to call it the illegal bookmaking preservation tax. This last point is relevant when it comes to operators’ role in tackling illegal gambling. The best way to achieve high channelization rates is to have a well-regulated, diverse and financially successful domestic market. Whilst states toy with punitive tax rates, black market operators are content to capitalise. Regulators worldwide are waking up to the fact that holding their licensees to high standards of consumer protection, anti-money laundering and responsible gambling compliance, with all the costs involved, has to be matched by a more robust attempt to tackle the illegal market. That means enforcement. The Australian Communications and Media Authority has long been at the forefront of enforcement actions with dozens of offshore gambling websites blocked over many years. In the last edition of the IMGL Magazine, we also looked at enforcement steps in Europe and the formation of a collaborative group of regulators to tackle the issue. In the US, early attempts at enforcement are now being seen with Michigan State blocking Bovada and US representatives calling on the Department of Justice to step in. The challenge is that whilst these services may be termed ‘illegal’, it is not always clear that they have contravened any laws. For operators who have been running gambling sites offshore for many years without challenge, it is no simple task to force them to close. The question is whether there are enough laws on the statute book to shut them down through the courts. A huge effort would be involved across all
50 states to put the illegal market out of business which is why some have called for the federal government to get involved. For operators, this kind of activity is an essential quid pro quo for the increased amounts of tax they are being asked to pay. But there may be more they can do in the fight against the illegal operations. By working together with regulators, they may be able to apply pressure on their suppliers not to work with the illegal market. Again, Michigan has led the way by requiring suppliers to the internet gaming industry to complete Illegal Gambling Attestation forms. In the end, a team effort is required. As the Yield Sec report concludes, monitoring, policing and enforcing against the availability and presence of illegals must become a leading strategy for all legal stakeholders, including regulators, operators, affiliates, payments providers, media platforms, law enforcement and state treasury teams. Going after the illegal operators is not the only path Yield Sec advise since controlling the marketplace can be more effectively achieved through controlling the means by which the audience find, encounter and, often unknowingly, engage with illegal gambling: advertising, search and social media promotion. Each stakeholder has their own part to play in the battle for control over the marketplace. Illegal gambling is not simply a problem for the regulator, or for law enforcement: it is a problem for all legal marketplace participants, including operators and affiliates. Only when everyone understands their marketplace, and their status within it, clearly and effectively, and accepts the fact that the marketplace is the victim of criminal activity, can the legal stakeholder community each act in their own best self-interest and do their part to move the needle against crime. With a US$41billion GGR prize at stake and the consequent taxation that would come from it, with all the commercial and community benefit both can provide, it has got to be worth the effort.
PHIL SAVAGE Head of Publications and European Affairs, IMGL For information contact
+44 7778 635836 phil@IMGL.org
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IMGL MAGAZINE | SEPTEMBER 2024
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