On June 29, 2022, a group of congressional representatives, seemingly led by Nevada congresswoman Dina Titus wrote to US Attorney General Merrick Garland. They jointly requested that the Department of Justice (DOJ) “make a concerted effort to fight illegal offshore sportsbooks.”
This is hardly the first request made to the DoJ requesting federal assistance in cracking down on unregulated gaming competitors to the regulated market. It’s noteworthy, however, that more than two dozen lawmakers signed this letter.
The letter notes that times have changed, as has the market, and “now 35 states and the District of Colombia [sic]” allow legal sports betting.
The congressional advocates note the pervasiveness of the unregulated market and say it poses a significant threat to the continued stability and growth of the regulated market.
Getting Into the Details
These predatory operations expose our constituents to financial and cyber vulnerabilities; do not have protocols to address money laundering, sports integrity, or age restrictions; and undermine states’ efforts to capture much needed tax revenue through legal sports betting channels.
The letter specifically names sites like Bovada, MyBookie, and BetOnline. It claims that they have technology that makes them virtually indistinguishable from legal US sportsbooks.
There are further concerns about the marketing and promotions of these offshore operators. Many receive a great deal of free publicity from major US media outlets.
It further notes that it is not as though these unregulated operations occupy dark corners of the online universe. Bettors do not need to possess sophisticated computer knowledge to access them. Indeed, many are easy to find through popular search engines.
What do the Congressional Reps Want?
The letter’s authors asked that the DOJ work with the gaming industry, sports leagues, and other interested parties in order “to identify the worst actors, investigate and prosecute them, and educate Americans on the dangers associated with illegally wagering on sports.”
The congressional gaming caucus has also asked that the DOJ provide them with a response by Sep. 6. They want details on what additional tools might be necessary to make illegal gambling prosecutions a higher priority for the DOJ.
Will We See Another Blue Monday?
Monday, May 23, 2011, is an infamous day for sports betting. Known as “Blue Monday,” it marked the day the DoJ seized ten online gambling domains.
It came just over a month after online poker’s “Black Friday” and was similar in nature. However, Blue Monday saw prominent online sportsbooks targetted.
Blue Monday used a sting approach, resulting in the seizure of several prominent domains. These included Bookmaker.com, as well as several lesser-known entities.
DOJ Claims Jurisdiction Over All .com Addresses
Following the Blue Monday seizures, many prominent online gambling sites began to seek out new domains. They sought to elude the DOJ’s reach by using less common suffixes for their URLs.
Though the most common flip at the time was from .com to .eu. However, many prominent unregulated sites now use others, like .ag or .lv.
This strategy is almost certainly the result of Uncle Sam’s jurisdictional reach. According to an article at Wired, published the year after Black Friday and Blue Monday, domains ending in .com, .net, and .org are administered via contracts based on US soil.
Server Location Isn’t Enough Protection – Just Ask Bodog
Most of the most popular domain suffixes, like .com, .net, .tv, and .org, are contracted with the Virginia-based VeriSign. This puts them within reach of US authorities regardless of where the actual entity operating the site exists. According to the Wired article, VeriSign implements the redirection from domains seized by a federal authority to a website displaying a notification of the seizure.
Even companies not based in the United States can see their domains seized by the DOJ if they’re using .com addresses. This was the case for the Canadian company Bodog. It saw the US federal government shut its site down despite the company existing outside of US borders.
As a result, the DoJ can demand that such sites be taken down. Conversely, if a site lacks such a US connection, the DoJ may send a request to authorities in another jurisdiction. However, so long as the company is compliant with local regulations, it is unlikely that non-US authorities will take such action.
Knowing is Half the Battle, or Is It?
This is not the first request the DOJ has received to increase its targeting of offshore gambling. Unfortunately, such enforcement would only partially solve the regulated market’s problems.
There are a lot of reasons that offshore gambling continues to thrive. Things are unlikely to change until regulated markets take a fully honest look in the mirror. No amount of domain seizures or arrests will stop illegal gambling on its own. This is simply not a problem that society can arrest its way out of.
Some things can be done to make the unregulated market less attractive. First and foremost is making the regulated products more competitive. Despite the mounting evidence against it, many states continue to do things like excluding wagering on in-state college teams or demanding in-person registration for online apps. Such policies make for a bad experience and drive players back to offshore sites.
Unfortunately, there are also some features of the unregulated market that the regulated market cannot responsibly offer. These include extending credit to bettors or offering wagers on certain types of events, such as youth sports or, say, the death of a public figure.
The impact of those issues is hard to gauge. Betting on credit likely has significant demand, but only for a subset of gamblers. Conversely, the sort of events on which betting can’t be permitted in regulated markets likely account for only a tiny portion of total bets.
Regulated sites need to fight back against those shortfalls by outcompeting offshore sites in terms of overall product quality.
A DOJ crackdown on offshore operators might provide regulated betting a temporary boost. On its own, though, it won’t make US sports betting more profitable long-term. It’s up to regulated operators to figure that out themselves.