CFG Calls for Federal Action Against Illegal Online Gambling

The Campaign for Fairer Gambling (CFG) has scrutinized the impact of illegal online gambling in the United States, particularly in Minnesota, New Jersey, and New York. Based on data from Yield Sec, CFG estimates that these illegal operations are siphoning off $9.5 billion in gross gaming revenue from these states. This significant economic impact has led CFG to call for greater federal intervention to combat unregulated gaming.

Yield Sec, an online marketplace intelligence platform, provided the foundational data for CFG's claims. By analyzing web users' browsing activity, including time spent on illegal gambling sites and the frequency of visits, Yield Sec used artificial intelligence tools to assign dollar values to this activity. This method allowed for a quantifiable assessment of the revenue being lost to illegal operators.

Key Movements

1. Economic Impact: Illegal online gambling operations are estimated to deprive Minnesota, New Jersey, and New York of $9.5 billion in gross gaming revenue annually, highlighting a significant economic loss.
2. Need for Federal Intervention: The Campaign for Fairer Gambling (CFG) is advocating for increased federal oversight to more effectively combat unregulated online gambling and curb the activities of illegal operators.
3. Challenges of Enforcement: Existing state and federal regulations have been largely ineffective in deterring illegal gambling operators, many of which operate from outside the US, underscoring the need for more comprehensive enforcement strategies.

Current State of Regulatory Systems

Despite the expansion of legal gambling, CFG argues that illegal online gambling continues to thrive. Derek Webb, the founder of CFG, criticized the current regulatory frameworks, stating that over 800 illegal operators persist across Minnesota, New Jersey, and New York without significant deterrence. Webb's stance is that sector-friendly legislation, regulation, and tax rates have failed to curtail the dominance of these unlicensed operators, underscoring the need for federal oversight.

While CFG's call for federal involvement in online gambling regulation is rooted in legitimate concerns, the proposed solution has its complexities. The 2018 Supreme Court decision in Murphy v. NCAA affirmed that while Congress can regulate online gambling, states have the autonomy to manage it in the absence of federal legislation. Furthermore, existing federal laws, such as the Wire Act of 1961, the Indian Gaming Rights Act of 1988, and the Unlawful Internet Gambling Enforcement Act, already provide a framework for addressing illegal gambling.

However, the enforcement of these laws faces significant hurdles. Many illegal gambling operators are based outside the United States, making arrests and prosecutions difficult. Additionally, the principle of net neutrality complicates government efforts to censor internet content, making it challenging to block access to illegal gambling sites effectively.

State-level enforcement agencies have shown some success in deterring illegal gambling activities. For example, New York's regulation of online sports betting prompted the offshore operator Bovada to cease accepting deposits from state residents. Similar enforcement threats in Michigan have had a deterrent effect on unlicensed online casino operators. These instances suggest that state regulators can be effective given time and resources.

“The dominance of illegal online gambling operators remains unchallenged despite the expansion of legal gambling. Sector-friendly legislation, regulation, and tax rates have not made much of a dent.”

A Multi-Faceted Approach to Addressing Illegal Gambling

The CFG's call for federal intervention, while well-intentioned, may not be the panacea for the issue of illegal online gambling. Effective enforcement requires a coordinated effort across multiple levels of government and society. Public and private sectors must collaborate to educate and deter individuals from participating in illegal gambling. Moreover, providing state-level law enforcement with the time and resources to build robust cases against illegal operators is crucial.

Illegal online gambling is not only an economic issue but also a public health concern, particularly for individuals with gambling-related behavioral problems. A comprehensive approach involving federal and state governments, as well as societal engagement, is essential to mitigate the adverse impacts of unregulated online gambling. Ultimately, real change will come from individuals choosing to avoid illegal gambling platforms, influenced by effective regulation, enforcement, and public awareness campaigns.