Since the US Supreme Court overturned the Professional and Amateur Sports Protection Act in 2018, a significant objective for legal US gambling stakeholders has been to eradicate the black market. This effort aims to protect consumers and uphold the integrity of a legalized and regulated betting environment.
The federal government made a notable impact in 2020 when it successfully shut down the original PokerStars, which had been operating illegally within the US. The same year saw the Department of Justice (DoJ) reach a settlement with Laura Varela and Costa-Rican sportsbook 5Dimes, another illegal operator in the US market.
Since these key actions, there appears to have been a lull in measures taken to prevent illegal gambling operators from infiltrating the American market. However, the Michigan Gaming Control Board (MGCB) has recently taken a pioneering step by issuing a cease-and-desist letter to an offshore operator.
On May 29th, the MGCB sent a formal notice to Curaçao-based Bovada, demanding that it cease operations within 14 days, which would be June 12th. The MGCB’s letter outlined Bovada’s violations of the Lawful Internet Gaming Act, the Michigan Gaming Control and Revenue Act, and several sections of the Michigan penal code. Should Bovada fail to comply, the MGCB has indicated its intention to pursue legal action against the company.
Brandt Iden, the head of government affairs for Fanatics Sportsbook and a key architect of Michigan’s legal gaming and online casino laws, discussed this development on the World Series of Politics podcast. “Michigan has taken a firm stance against Bovada, signaling to other illegal operators that their presence will not be tolerated,” Iden stated. He further encouraged regulators in other states to adopt similar measures, emphasizing that a regulated market cannot thrive if the illegal market remains active.
Connecticut appears poised to follow Michigan’s lead. According to a Sports Betting Dime report from June 11th, Connecticut’s sports betting division within the Department of Consumer Protection regularly issues cease-and-desist orders whenever they receive consumer complaints or identify illegal gaming operators. The state has plans to send a similar letter to Bovada, which is already banned in Delaware, New Jersey, New York, Maryland, and Nevada.
Brendan Bussmann of B Global, based in Las Vegas, highlighted the importance of a coordinated effort between state and federal authorities. “The cease-and-desist is just the first step,” Bussmann said. “Federal involvement is crucial for a comprehensive approach. Sufficient legal frameworks must be in place for prosecution and citizen protection. If such laws exist, they should be enforced thoroughly.
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The MGCB is also proactively ensuring that licensed suppliers and vendors do not engage with illegal operators. Recently, the board mandated internet game content providers to fill out an “Illegal Gaming Attestation” form to affirm their adherence to legal operations.
Bussmann commented on this development, stating, “This requirement underscores the seriousness with which regulators are addressing illegal operations. Licensed operators and their suppliers are all being scrutinized to maintain integrity in the market.”
Legal gaming stakeholders often hesitate to involve the federal government in their industry. Nevertheless, combating black-market operators, who evade taxes and lack consumer protections, is one area that might benefit from federal intervention. The fragmented approach of state-by-state enforcement across 50 states is inefficient and costly, whereas a federal crackdown could effectively eliminate illegal operators nationwide.
Illegal gambling extends beyond digital wagers to include rogue suppliers, vendors, and even affiliates who sometimes unknowingly promote black-market operators. Bussmann noted that mainstream media and affiliates, by sharing information about illegal operators, contribute to the problem. “It’s the entire ecosystem at play. When affiliates promote presidential odds, for example, they unknowingly support the illegal market,” Bussmann explained.
In April 2023, seven regulators, including the MGCB, petitioned the DoJ to prioritize investigations into illegal gambling operators and online casinos. Four months later, the DoJ affirmed its commitment to addressing illegal gambling, reinforcing ongoing investigations.
The federal government has been engaged in a comprehensive investigation into the Wayne Nix illegal gambling ring over the past year. This investigation has led to significant legal consequences for those involved, including the impending sentencing of Nix and a key bettor’s agreement to plead guilty. The operation raked in hundreds of millions in bets, with money laundering activities spanning California and Nevada casinos.
Whether on the federal or state level, efforts to combat illegal gambling operators must persist. Bussmann emphasized the need for continued vigilance: “This isn’t about claiming victory; it’s about responsibly shutting down these threats to the industry. It’s crucial for preserving an ethical and lawful gaming environment.”
