Eighteen states, plus Washington, D.C., have established laws that allow for legal, regulated sports-betting within their borders since SCOTUS overturned the Professional and Amateur Sports Protection Act of 1992, which previously served to provide Nevada with a decades-long monopoly on sports wagering. The normal expectation would be that, in those states, illegal sports betting has been drastically reduced. The data paints a different picture.
The American Gaming Association, a national trade group representing the $261 billion U.S. casino industry, released a study that shows illegal offshore operators realized a 3% increase in activity in the past year within states with legal sports betting. The study, conducted by Heart + Mind Strategies, surveyed 3,451 American adults over the age of 21 from various subgroups.
While it is apparent and obvious that many consumers would shift their sports betting activity from illegal, offshore operators to domestic legal options such as DraftKings, FanDuel, PointsBet, or MGM, it is surprising that the amount of illegal activity has actually increased in those states that have taken the initiative to legalize sports wagering within their borders. Perhaps many states’ efforts have not gone far enough or states’ greed has gotten in the way of their success in converting illegal bettors to consumers placing their money with licensed and regulated operators.
The biggest problem remains a lack of options for the consumer. States that have proven unwilling to provide constituents the opportunity to bet through mobile devices will continue to find people opting for the ease and convenience of placing wagers with illegal, offshore options.
New York is a perfect example. New York’s more than 8 million inhabitants cannot place a bet through their mobile phones. Amending its laws to allow online sports betting has been discussed, but was once again punted by the legislature on July 20. The measure apparently also lacks support from Governor Andrew M. Cuomo.
“Unfortunately online will never happen in NY,” states a tweet reply to the news that New York will delay debating online sports betting. “Guys like myself actually couldn’t care less. I still have multiple offshore accounts and a handful of locals I have used for 25+ years, knowing I will always get paid and never get capped with a limit.”
Therein lies the major problem for states that believe they are making progress by legalizing sports wagering within their borders, but refuse to take the extra necessary step of also providing consumers the opportunity to place wagers through their mobile devices. Alternatives exist that will lead to continued growth of illegal offshore operators within those very states that claim they are adding transparency and acting in a progressive manner. This is also recognized by American Gaming Association President and CEO Bill Miller.
“Giving consumers convenient alternatives to the illegal market, like regulated mobile offerings and competitive odds, is key for getting bettors to switch to legal channels,” Miller said.
Another problem identified by Miller is that more than half of consumers who placed most of their wagers with illegal operators over the past year did so while believing they were betting legally. As such, more needs to be done to educate consumers about the legal options within their states. If the data is to be taken seriously, then such a large number of people unknowingly wagering illegally is something that must be and can be corrected.
Darren Heitner is the founder of Heitner Legal. He is the author of How to Play the Game: What Every Sports Attorney Needs to Know, published by the American Bar Association, and is an adjunct professor at the University of Florida Levin College of Law. You can reach him by email at heitner@gmail.com and follow him on Twitter at @DarrenHeitner.