Illegal gambling sites remain a problem despite legal options in Michigan

the American Gaming Association recently asked the United States Department of Justice to exert more legal force on illegal gambling operations doing business in the country.

In a three page letter addressed to Attorney General Merrick GarlandAGA said the “brazen and coordinated affair” of online outfits and other entities has increased the threat to American consumers using their services.

Offshore sites such as MyBookie, BetOnline and bovada were referenced, as were warnings about “skill-based” machine builders.

“We urge the Department to make it a priority to act … to protect American consumers, crack down on illegal operators, and enforce federal regulations,” Bill Miller, AGA President and CEO wrote.

The AGA says it wants to protect its members, consumers

Chris CykeAGM Senior Vice President of Government RelationsTold PlayMichigan that issues such as responsible gaming and compliance tend to unite its members. It’s not easy in a highly competitive industry where not everyone agrees on everything.

There are approximately 80 AGA members from across the gaming industry. This includes major casino gaming operators, native online gaming platforms, sports betting sites, slot machine manufacturers and more .

The association meets throughout the year to decide what efforts to focus on to best represent industry interests.

Cylke said the Justice Department’s letter was not inspired by a specific event, but rather part of its ongoing commitment to move to fully legal markets.

“I think this letter was really meant to target some of the top DOJ brass to really emphasize the need to take seriously the use of their enforcement power to more aggressively attack the illegal gambling market. “Cylke said.

Offshore sites: Legal or not legal or what?

Defining the legality of offshore operators to the general public can be difficult. Take Bovada, one of the companies featured in the AGA communication. Bovada runs its own Twitter account displaying bonus offers and sports jokes like any other regulated platform.

A Google search of Bovada’s legal status basically tells consumers: you’re good to go in most states. Bovada’s Terms of Service includes a link indicating that it has been authorized by the Government of Curacao since 1996. So, legal or not?

“They’re illegal because they’re not licensed to operate in any state in the country,” Cylke said. “And they’re also, you know, in violation of various federal laws.”

Cylke said that since they operate outside the law of the land, this makes enforcement difficult unless one of the site’s agents sets foot on US soil.

“Our message in the letter to the DOJ was, even have something less than a conviction, have an indictment or take some other type of official government action that would send the message that these are bad actors who are breaking law, would be helpful in educating the general public,” Cylke said.

Why would anyone use an illegal site anyway?

PlayMichigan spoke with someone who has been involved in legal and illegal gambling operations. This includes running their own offshore betting site and accepting real bets as bookmaker. We will call them “Paul” to protect their identity.

We asked Paul why people might choose to risk betting money on an offshore site. They gave various reasons by SMS:

  • Credit and/or debit cards are used on legal sites. This opens the possibility for a significant other to have easy access to know how much money is being wagered.
  • Earnings from a legal site are taxed.
  • Having to deposit money in advance in legal sports betting, while a local bookmaker may offer a person a ‘credit’.

The case of regulated gambling

When asked how the AGM could respond to these reasons, Cylke said they would not be able to reach everyone.

“I mean, I guess these are the same people who would buy illegal cigarettes from the back of a truck driving down the road,” Cylke said.

Cylke said while there is an obvious competitive element to AGA’s position, it’s really about protecting American consumers and keeping the American gaming industry regulated and fair. And not just for online operations, but with things like unregulated skill machines.

Think of a slot machine that can be found in the back of an old bar or something similar. Cylke described 7-11 gas stations in Virginia, where he sees machines like this everywhere, often populated by people who look like they’ve been there for hours.

“It’s a stark contrast to the highly regulated environment we have where you have people who are trained to recognize problem gambling and intervene if people go out of their finances,” Cylke said.

He said some states have thousands of these machines, but credited Michigan’s efforts to combat them.

“I think we have to give credit to the state of Michigan, where the regulator has really made it a priority to try to crack down on these unregulated slot machines,” Cylke said.

Michigan cracks down on illegal operations

In March, the Michigan Gaming Control Commission announced its assistance to Lansing police and the attorney general’s office in raids on two alleged casinos in town. The raids resulted in the seizure of over $91,000 and over 80 machines.

Mary Kay Bean, MGCB spokesperson said the Lansing locations were part of three raids that have taken place since internet gambling and sports betting were permitted by the state in January 2021.

“The MGCB is working with the Michigan Department of the Attorney General on investigations, and the department is pursuing warrants, charges, and prosecutions in alleged cases of illegal gambling,” Bean wrote in an email to PlayMichigan.

The Gaming Commission offers its gambling expertise to assist law enforcement as it views illegal gambling as a threat to Michigan consumers.

“The MGCB is aware of illegal offshore activities and we believe Michigan’s legal and regulated market is a deterrent to illegal operators,” Bean said. “Like the AGA, the MGCB views illegal gambling as a serious problem for the United States”

Bean said the MGCB encourages the public to submit information about suspected illegal gambling. Tips made on the agency website and by phone at (888)-314-2682 can remain anonymous. Information sent directly by e-mail to [email protected] are not anonymous.

Legal Gambling Benefits States in Different Ways

Legal gambling operations do not only benefit consumers who gamble. Cylke pointed out that offshore operations also take money away from programs that receive funds from regulated markets.

Michigan has generated hundreds of millions in tax revenue since legalizing online gambling in January 2021. Online casinos have generated more than $360 million in tax dollars for state and local governments.

Sports betting generated more than $19 million in taxes for state, local and tribal governments.

These tax revenues are intended to fund a variety of public services, including education and economic development. Detroit Mayor Mike Duggan has previously credited online gambling with helping offset pandemic losses for the city.

These tax dollars also help fund programs in other states that help veterans or help reverse homelessnessCylke added.

Regulated markets offer guarantees to punters

Cylke said legal and regulated markets also provide well-documented safety measures for people who may have addiction issues. All the reasons why the AGA says illegal gambling poses a serious threat to consumers.

Regulated operators offer a number of guarantees to punters. Within their apps, customers can create their own time or monetary limits. Legal operators also honor self-exclusion programs and provide resources to help deal with problem gambling.

The legalization of online gambling in Michigan has led to more calls to the problem gambling hotline for a variety of reasons. But it’s easier to seek help when the activity that led to the addiction is legal.

Legal operators also work to protect the integrity of games. Take, for example, the case of Atlanta Falcons wide receiver Calvin Ridley. He placed a bet (on a Falcons game) on a legal application in Florida. The app operator reported the bet. This report and this discovery would not have taken place with an illegal or offshore account.

“It’s not just an economic threat to us, but it’s also a threat to consumer protection, because these illegal channels can kind of operate in the open,” Cylke said.


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