Two Minnesota men are suspected of using TikTok to run an illegal gambling operation.
The state’s Alcohol and Gambling Enforcement Division (AGED) is investigating the possible racket. Allegedly, an Edina resident was collecting money from would-be gamblers to play at the casino on their behalf. The man – or sometimes his brother – would then live-stream the games on TikTok so they could watch him play with their money.
According to court filings, the 39-year-old would take $5.99 upfront, plus 25% of whatever money he collected from the gamblers. One video shows the man hitting a $15k jackpot playing slots. The TikTok channel had 165,000 followers worldwide, suggesting that the operation stretched beyond MN borders.
Authorities have requested financial statements and other information to proceed with the case. According to Minnesota law, placing bets on behalf of others is illegal. However, they have not yet officially filed charges.
Officials from AGED and American Gaming Association (AGA) both say they’ve never seen anything like this before.
Illegal Gambling Schemes Arise From Prohibition
Streaming gambling over TikTok and other social media channels is not new. Most sites are full of videos of people streaming poker, blackjack, and other popular games. Twitch is perhaps the most infamous for gambling streams, though it has recently banned some forms of gambling from the site.
Illegal gambling has long been a problem in the US. The AGA has been bringing attention to illegal gambling and its costs to the US economy. AGA estimates that Americans bet $510 billion illegally per year. The agency also estimates that states are losing $13.3 billion in annual tax revenue.
Earlier this month, the Department of Justice (DOJ) charged 11 men for running an illegal sports betting website, Red44. DOJ estimates the website has been running for at least 17 years via an offshore server in Costa Rica. DOJ also estimates that Red44 made $75 million in revenue, equating to$20 million in lost tax revenue. (Editor’s Note: It would be more like $15 million at a typical 20% tax rate, though this varies by state).
The scheme raises the question of whether Minnesota ought to consider gambling expansion.
One of the strongest arguments for legalizing online gambling is that illegal operations flourish in the absence of a regulated market. Aside from the potential tax revenue, regulated online gambling options are safer for the consumer than the alternatives. All operators must go through licensing procedures. They also have to report and get audited by authorities.
When an industry is regulated, there will be public funds to address potential problems. One of the main concerns is gambling addiction. Many states with legal online gambling have created programs to educate the public and help with addictions.
Where is Minnesota On The Online Gaming Expansion Spectrum?
In 2022, a bill by Rep. Zach Stephenson, a Democrat, passed the state House but failed in the Republican-controlled state Senate. In November, Democrats flipped the Senate, bringing new hope to sports betting proponents. However, a few of last year’s bill supporters are leaving office, and Stephenson must convince the newcomers.
Stephenson already announced that he plans to bring another bill to the legislature this year. Similar to the bill in 2022, it would empower Minnesota tribal casinos to run in-house and mobile sports betting. Tribal leaders have been historically against sports betting but changed their stance last year.
According to Rep. Stephenson, existing tribal casinos are the best option for the state. As he points out, they already understand the local market. Existing casinos are also already regulated, which cuts down on additional bureaucratic overhead.
However, Stephenson has lost some crucial allies in the legislature. Outgoing Senator Karla Bigham says tribes and the public need to raise their voices because there is still a lot of resistance. She says the public must pressure lawmakers, or Minnesota will not see sports betting for the foreseeable future.
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