Federal Legal Officials in the U.S. Petition Department of Justice to Halts Unlawful Offshore Betting Companies
In a joint letter to the Department of Justice (DOJ) and Attorney General Pam Bondi, a coalition of 50 U.S. attorneys general have called for increased enforcement against illegal offshore gambling companies that accept U.S. customers. These operations, they argue, cause significant harm to consumers, state-regulated markets, and state economies.
The illegal offshore gambling platforms evade licensing requirements, offer little or no consumer protections, fail to verify user age, ignore state boundaries, and avoid paying taxes, potentially contributing to fraud, problem gambling, and other criminal activities such as money laundering and human trafficking.
The coalition highlights that the unregulated industry, estimated to exceed $400 billion in annual volume, leads to an estimated loss of over $4 billion in tax revenue for states. These illegal activities undermine the rule of law, cheat taxpayers, and pose risks especially to young people and vulnerable adults.
The enforcement of the Unlawful Internet Gambling Enforcement Act (UIGEA), which prohibits financial transactions related to unlawful internet gambling, could have several potential implications. Strengthened enforcement could disrupt illegal offshore operators' ability to process payments from U.S. customers, thereby reducing their market presence. Increased accountability for offshore gambling companies could curb fraudulent schemes and irresponsible gambling.
The attorneys general seek more vigorous DOJ enforcement of UIGEA and related laws to address the escalating harms caused by illegal offshore gambling, protect consumers, uphold state laws, and recover lost tax revenues.
Notably, on "Black Friday" in 2011, the DOJ seized websites, servers, and domain names of companies that sold counterfeit products, including some online poker operators. The UIGEA, enacted in 2006, resulted in most online gambling sites withdrawing from the U.S. market. However, some operators, such as PokerStars, Full Tilt Poker, UltimateBet, and Absolute Poker, remained in the U.S. market and grew to dominate the online poker landscape.
Full Tilt, UltimateBet, and Absolute eventually disappeared, and their customers' funds were lost. PokerStars, on the other hand, eventually settled with the DOJ, which included acquiring Full Tilt Poker and making whole the customers of both PokerStars and Full Tilt.
The attorneys general want the DOJ to go after offshore gaming companies "to the fullest extent available under state and federal law, both criminal and civil." Visa and Mastercard have signaled their willingness to investigate and address unlawful use of their networks for gambling transactions, which could potentially aid in the enforcement efforts.
References: [1] Joint letter from U.S. attorneys general to the DOJ and Attorney General Pam Bondi (2021) [2] "Black Friday" seizures and indictments (2011) [3] National Association of Attorneys General (n.d.) [4] Coalition to Stop Internet Gambling (n.d.) [5] Unlawful Internet Gambling Enforcement Act (2006)
Policies surrounding the illegal offshore gambling industry extend into various domains, such as crime and justice, politics, and general news, as the escalating harms inflicted by these unregulated platforms, including potential connections to money laundering and human trafficking, are matters of grave concern. Furthermore, the unchecked industry not only threatens state revenues, close to $4 billion in taxes being lost annually, but also undermines state economies and consumer protections, hence the call for increased enforcement from the coalition of U.S. attorneys general.
