Marcus Fruchter, the administrator of the Illinois Gaming Board, is urging the federal government to take action against illegal offshore online gambling. Along with top gaming regulators from six other states, he is calling on the U.S. Attorney General to intervene.
Regulators are concerned that the profits from illegal websites could fund other criminal activities, such as human trafficking and the drug trade.
Letter sent to the Department of Justice
Fruchter and leaders of six other gaming regulatory bodies in Michigan, Colorado, Nevada, Louisiana, Mississippi, and New Jersey sent a letter to US Attorney General Merrick Garland, calling for a more robust effort to combat illegal gambling.
The letter requests that the Justice Department focus on investigating and prosecuting offshore sportsbooks and online casinos. It highlights the risks associated with these sites, including concerns about fair payouts, age verification processes, and measures to prevent money laundering. Additionally, the letter emphasizes that these sites are depriving states of tax revenue needed to support critical initiatives.
The letter acknowledges the broad jurisdictional responsibilities of the Department of Justice, recognizing that priorities may change over time. It emphasizes that while states play a role in addressing offshore illegal gambling, the significant threats posed by this issue necessitate increased federal attention and involvement.
The letter to Garland requests assistance in investigating and prosecuting criminal activity that occurs beyond state borders.
The letter states that we urge the Department of Justice to prioritize the investigation and prosecution of offshore sites, and we are prepared to offer any assistance we can as state gaming regulators.
$13.3 billion in tax revenue lost to illegal gambling
In November, a report from the American Gaming Association revealed that the illegal and unregulated gaming market in the United States is estimated to be worth $510.9 billion annually. This results in a loss of approximately $44.2 billion for the legal online casino and iGaming markets, and prevents states from collecting an estimated $13.3 billion in tax revenue.
After the report was published, AGA president Bill Miller labeled the illegal betting market as a significant concern for the public.
Miller stated that illegal and unregulated gambling is a serious issue in our society, exploiting vulnerable consumers, avoiding regulatory responsibilities, and depriving communities of essential tax revenue for important services like infrastructure and education. He emphasized that while the extent of the illegal market has always been known, a recent report has shed light on just how widespread it truly is.
The study found that bookies and offshore operators collect $63.8 billion in illegal sports betting wagers, making up 12.4% of total illegal gaming activity. Illegal online casino slots and table games dominate the illegal igaming sector, raking in an estimated $338 billion annually.
Miller stated, “We are committed to a long-term battle to safeguard consumers, uphold communities, and protect the law-abiding individuals in our industry.”
In New Jersey, Delaware, Pennsylvania, Michigan, and West Virginia, online casino gambling is legal. Online poker play is also legal in Nevada.
Illinois is losing $105 million in taxes annually
According to a Play Illinois study, Illinois could potentially miss out on up to $105 million in tax revenue each year by failing to legalize online casinos in the state.
According to the AGA, residents in the 12 midwestern states wager around $91.8 billion each year through illegal online casinos. This results in approximately $3.7 billion in revenue being generated by the black market solely in the midwest.
The total population of the midwest states is around 69 million, with Illinois making up roughly 18% of the total population in the 12-state region.
An 18% portion of the $91.8 billion handle wagered on illegal online casinos results in $3.7 billion in lost revenue.
- $1.65 billion in handle
- $660 million in revenue
In 2022, Illinois online sports betting incurred an average tax rate of 16% on revenue. If this same tax rate was applied to the estimated $660 million lost revenue from illegal online casinos in Illinois, it would result in approximately $105.6 million in lost tax revenue that could have benefited the state’s coffers.
Another Play Illinois article proposed five ways to effectively utilize additional revenue for the benefit of Illinois residents.
