US Department of Justice Urged to Combat Offshore Gaming Platforms

Posted on: May 8, 2023, 08:19h. 

Last updated on: May 8, 2023, 01:06h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

The United States Department of Justice (DOJ) is being asked by a coalition of seven states to combat unregulated, offshore gaming websites that illegally cater to players inside the country.

Department of Justice offshore gaming
A file photo shows an online gambler reviewing sports odds. Seven states have asked the US Department of Justice to go after offshore gaming platforms that accept players from the US in violation of federal and state laws. (Image: Shutterstock)

On Friday, the Michigan Gaming Control Board (MGCB) joined six other state gaming regulatory agencies in urging the federal law enforcement department to prioritize fighting illegal offshore casino websites and sportsbook platforms. Michigan joined gaming regulators from Colorado, Illinois, Louisiana, Mississippi, New Jersey, and Nevada in petitioning the DOJ.

In Michigan, strict laws and rules govern internet gaming and sports betting and provide consumer protections, promote confidence, and ensure fair and honest gaming,” MGCB Executive Director Henry Williams said in a statement. “We are willing to help the US Department of Justice in any way we can as it pursues enforcement of US laws against offshore illegal gaming enterprises that take advantage of our citizens.”

In the coalition’s letter to US Attorney General Merrick Garland, the group said its request is warranted because offshore gaming provides no consumer protections, such as regulated play and guaranteed payouts on wins. The offshore gaming industry also provides no tax benefit.

No Legal Recourse

The gaming states want the DOJ to better enforce the country’s laws when it comes to online gambling. They contend that such websites often do not use appropriate age verification tools to ensure the player is of legal gaming age. The coalition added that the websites don’t have controls to prevent money laundering or invest in responsible gaming programs.

Since the offshore websites don’t operate from the US but from iGaming-friendly jurisdictions like Malta, the Philippines, and the Isle of Man, state gaming regulators and their associated law enforcement agencies have little recourse in going after unregulated gaming operators.

Offshore websites can simply disappear and go offline with their customers’ funds. And since the websites don’t undergo background and suitability checks by state gaming regulators, it’s often unknown who is behind the iGaming platforms.

The seven states are joined in their DOJ request by the American Gaming Association (AGA), the US gaming industry’s lobbying arm in DC.

“While prosecutions and convictions may be difficult to secure, the AGA firmly believes the Department can make a strong and meaningful statement by investigating and indicting the largest offshore operations that openly violate federal and state laws,” the AGA wrote to Garland in April 2022.

Offshore Revenue

The AGA believes unlicensed, unregulated offshore gaming websites generate gross revenue of more than $500 billion annually. The association says if that number is relatively accurate, the tax benefit loss is upwards of $13 billion.

Illegal and unregulated gambling is a scourge on our society, taking advantage of vulnerable consumers, skirting regulatory obligations and robbing communities of critical tax revenue for infrastructure, education, and more,” said AGA President and CEO Bill Miller in a release.

The DOJ has targeted unregulated online gambling platforms before, most notably in 2011, when the agency seized the online assets of PokerStars, Full Tilt Poker, and Ultimate Bet. The seizure occurred after those websites were deemed operating in violation of the Unlawful Internet Gambling Act of 2006.