Illegal Offshore Gambling in the US: Risks and Consequences

Justice Department Claims Illegal Offshore Gaming Ops Remain a Priority

The Department of Justice (DOJ) has responded to a letter from gaming regulators in seven states urging them to investigate and prosecute illegal offshore gaming websites. The DOJ stated that it remains committed to combating illicit online gaming activities.

Online casinos are currently only authorized in six states, while online sports betting is legal in almost 30 states. However, offshore sportsbooks continue to target US bettors, and many unregulated internet casino platforms operating from foreign jurisdictions continue to target US-based gamblers.

The AGA estimates that more than $500 billion is gambled unlawfully through unregulated gambling websites yearly, resulting in states missing out on approximately $13 billion in tax income. The DOJ’s response shows that they are aware of the issue and are committed to taking action.

The Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006 makes it a federal crime for a business to operate an online casino unless licensed by a state where such gaming is legal. The US Wire Act of 1961 also prohibits wire transactions across state or country lines for gambling.

The DOJ’s statement reminds offshore operators that they are not immune from prosecution and that the DOJ is committed to enforcing the law. It also tells US-based gamblers to be cautious when using unregulated offshore gambling websites.

States’ Petition

In April, seven states, including Nevada, New Jersey, Michigan, Illinois, Colorado, Louisiana, and Mississippi, sent a letter to Attorney General Merrick Garland requesting the Department of Justice to prioritize combatting illegal offshore sportsbooks and online casinos. The regulators of the legal gaming industry in these states urged the DOJ to dedicate more resources to illicit online gaming enterprises.

The letter emphasized the well-known dangers posed by these unlawful operations, such as a lack of investment in responsible gaming programs, loss of state tax revenue that funds important initiatives, no age verification requirements to protect minors, no controls to prevent money laundering, and an absence of guarantees that customers will receive fair payouts. The letter also highlighted that offshore operators who offer their products in these highly regulated state jurisdictions are doing so in contravention of not only state laws but also federal laws.

The state regulators pointed out that states with legalized gaming have gone to great lengths, through robust gaming laws and regulations, to ensure that each state can protect its citizens and regulate gaming efficiently and effectively. Therefore, the DOJ must help these states combat illegal gambling and prosecute offshore sites.

Appeal Heard

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The Department of Justice (DOJ) has responded to the seven state gaming regulatory agencies regarding illegal online gambling. Megan Bennett, an intergovernmental liaison at the DOJ, wrote a letter acknowledging the states’ input and emphasizing the DOJ’s commitment to investigating and prosecuting illegal gambling. Bennett’s response coincided with the arrest of Richard Sullivan, who had been indicted in 2010 for running a multimillion-dollar sports betting ring from Antigua. The DOJ recognizes the adverse impact of illegal gaming on individuals and communities and will continue to use all available tools to detect, investigate, and prosecute such illegal activity.

The DOJ’s response follows calls from the American Gaming Association (AGA) and other lawmakers to crack down on illegal offshore gambling sites that evade consumer protection regulations. The AGA has stated that these websites pose a significant threat to consumer protection and the economic benefits of legal gaming in communities across the country.

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