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US Gamblers Play Offshore Despite Increased Local Licensing
By Shane Addinall Feb 27, 2022 IndustryAccording to the ASA, the American dream for regulated betting is an impossible feat unless the federal government takes charge to weed out black market platform providers.Legal online sportsbooks in the USA face a tremendous challenge of winning market share from offshore black-market betting platforms. The American Gaming Association (AGA) believes it’s time for the Federal Government to take charge and clamp down on illegal betting.
On top of government intervention, the association also calls on regulators to take care when drafting gambling laws relating to advertisements. According to the AGA, proper advertising of legal betting sites is the answer to successful channelisation and US lawmakers must learn from the mistakes of other regulators.
Blackmarket sports betting is an extremely popular option for money laundering criminals and because the US regulates gambling at the State level, only federal action can curb offshore activities.
American Black Market Betting
The ASA urges authorities to take action as the free flow of gamblers to offshore sites impair the growth and success of the regulated US gambling market. A 2020 study conducted by ASA found that more than half of American sports bettors utilise offshore sportsbooks. This related to revenues between $340 billion and $1.7 trillion globally and the report estimated that $140 billion of that was “hot money”.
Although many states now regulate sports betting and legal wagers are on the rise, experts believe that the lack of incentive for punters to cross over from offshore sites which hinders the regulated industry’s growth. Legal betting revenues are in stark contrast to the estimated illegal industry. North America’s GGR stood at $2.3 billion for 2021. AGA President, Bill Miller said:
“This is one area where we talk about what can the federal government do to help our industry. This is a really important one”.
With more than half of the states offering legal betting before the 2022 Super Bowl, revenue could increase to $7.6 billion by the end of the year. Statistics predict that if at least 44 states open legal betting markets by 2030, revenues could exceed $10 billion.
What are the Odds?
How can regulated operators attract current offshore gamblers with their regulatory red-tape and lower odds stacked against them? Studies revealed that the prohibition of gambling ads directly relates to an increase in black market betting and, although players prefer to use licensed operators, jurisdictions with unnecessary strict laws experience higher offshore betting. Miller commented:
“Raising the awareness and attracting players to legal sportsbooks is how we protect consumers, generate needed tax revenue for states, and how we’ll stamp out the illegal market – and advertising has helped to fuel this change.”
Channelling gamblers toward regulated sites where their interests are more of a priority contains a few more steps than merely creating awareness of legal platforms.
In reality, offshore sportsbooks have a more attractive sign-up process because of their lack of regulatory protocols. They can offer more favourable odds as they do not pay licensing fees or taxes. They permit credit betting and, in the case where a gambler registered for self-exclusion, offshore sites will allow them to continue betting.
Over three-quarters of the survey participants indicated they were not aware of the fact that they were using illegal betting sites. Regulators need to consider how important freedom of information is in educating the market on legal options.
Federal Government’s Involvement
The nature of USA laws causes state governments to require federal intervention with offshore crimes. Bill Miller appeals to the nation’s government to take action against black-market sportsbooks in the same manner they did with online poker in 2011.
In the meantime, operators could explore legal ways of channelling bettors to their sites. Improved sign-up processes, transparent bonus offers, and fast withdrawals all go a long way to customer retention and loyalty.
A recent study conducted within the European regulated markets indicates that punters will choose licensed operators when legislation isn’t too rigid. Reasonable public exposure to gambling advertisements also has a positive impact on the channelisation toward regulated sites.
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