AGA Sounds the Alarm Against Offshore Operators

Fans walk past a FanDuel sports betting location at Footprint Center. Christian Petersen/Getty Images/AFP

Online gambling has exploded across mainstream America and its legalization in more than half the states in the nation ensures that its sportsbook operators are in strict compliance with regulatory rules and procedures. 

But offshore books circumvent these rules causing what the American Gaming Association deems a “serious threat” to the U.S. licensed sportsbooks and the industry at large. 

Crackdown Coming?

The American Gaming Association (AGA) believes that the offshore sites taking action from American bettors pose a grave concern to the domestic operators that spend millions in advertising and even more in taxes to the states in which they operate. 

The offshore sportsbooks are not licensed by the U.S. government and do not pay the same onerous taxes that is incumbent upon licensed sportsbooks like FanDuel, Caesars Sportsbook, and BetMGM to name a few.

And because of this unfair advantage, the AGA has become increasingly vocal about the U.S. government taking action against these offshore operators. Yet, many of these books reside in countries where they are licensed and do pay taxes to their host nations which could make things a bit sticky.

Nevertheless, there are plenty of rogue books in the sea of online operators that are nothing more than predatory marketing companies, eager to take the money but reluctant, if not resolute, in not paying their customers when requested. 

“What maybe at one point in time was a relative nuisance, is now becoming a serious threat to the legal, licensed gaming industry,” Bill Miller, CEO of the American Gaming Association said in a recent interview.

Even some members of Congress are getting in on the act, having penned a letter to Attorney General Merrick Garland urging his office to take action. The states take a cut of the profits earned by the online operators but if a portion of those customers is diverted to the offshore sports betting sites, then that is revenue taken out of the system which hurts both the operators and the states in which they operate.

The beginning of the letter opens as follows:

Dear Attorney General Garland:

“We write today to request that the Department of Justice make a concerted effort to fight illegal offshore sportsbooks. 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.”

FanDuel Speaks Out

The offshore competition hurts the entire domestic industry and one of its biggest critics happens to be one of the largest online operators, FanDuel. They too have been asking for assistance in combating the overseas operators and their CEO, Amy Howe, recently said in an interview with CNBC, “There are hundreds of illegal or unregulated operators who are taking sports bets every single day. We estimate there’s potentially $15 billion going through some of these offshore operators.”

Howe went on to say, “It gives them an unfair competitive advantage. They can offer better odds to the consumer.” 

And the other advantage that the offshores have is bigger limits than those regulated by the U.S. government. However, the most significant disadvantage for any customer, American or otherwise, is that unregulated books can run the gamut from legitimate to nefarious. 

The average offshore customer believes them all to be legitimate until it comes time to get paid. Then they find out very quickly which kind of offshore book they are betting with. Fortunately for customers of the U.S. licensed sportsbooks, all of these entities are closely monitored by their respective governing agencies, and getting paid promptly when requested is never an issue.