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Read Full BioA collection of 50 Attorneys General (AGs) has requested that the U.S. Department of Justice (DOJ) take decisive action against the growing threat of illegal offshore gambling operations.
A letter addressed to U.S. Attorney General Pam Bondi states that the AGs “seek the USDOJ’s cooperation in ensuring these companies are brought to justice to the fullest extent available under state and federal law.”
Plan of Action Outlined by Attorneys General
The letter urges the DOJ to utilize a range of tools at its disposal to target unlicensed operators in the U.S.
The main actions suggested include:
- Pursue injunctive relief and website seizures under federal law
- Seize assets and domain names
- Coordinate with financial institutions to block payments
The AGs point to previous interventions by the DOJ, targeting websites that sold counterfeit goods on Black Friday in 2011, and a more recent example in April 2024, when Russian sites involved in cybercrime and identity theft were successfully shut down.
Thus far, AGs have generally relied on softer measures to target unregulated gambling companies, such as New York’s AG Letitia James issuing cease-and-desist letters to 26 unlicensed operators.
However, the letter emphasizes that the DOJ has the authority for more decisive action, stating: “Because the websites owned by unlawful offshore operations violate federal law, USDOJ can and should seize the websites and domain names of operators and retain any proceeds recovered as part of the seizure.”
Additionally, the DOJ and AGs can collaborate with payment processors to block sites from accessing the U.S. financial system. The letter noted that both Visa and Mastercard “have already signaled their willingness to investigate and address unlawful use of their networks for gambling transactions.”
Critics would argue this would push more users to platforms that allow alternative payments, such as crypto casinos. Globally, crypto casinos generated an estimated $81.4 billion in revenue last year, marking a fivefold increase from 2022.
Unregulated Gambling Outpacing Legal Markets
In the U.S., unregulated gambling platforms are also growing revenue at a faster pace than regulated companies, despite the increase in the legalization of sports betting and online casinos in the country.
The letter references an American Gaming Association (AGA) report from 2022, which estimated that Americans spent $400 billion annually at unregulated betting sites. The majority of this ($338 billion) is at online casinos, with around $64 billion at online sportsbooks.
These figures have increased since 2022, and the market share of unlicensed gambling has also increased. In 2023, unregulated companies held a 71% share of the overall online gambling market, with $40.9 billion generated in revenue. This rose to 74% in 2024, with $67.1 billion generated compared to the $23 billion generated by regulated online betting companies.
According to a report by Yield Sec, unregulated gambling encompasses offshore betting sites, sweepstakes casinos, and prediction markets. The report’s conclusion, commissioned by the Campaign for Fairer Gambling, stated that, “states need help from federal authorities to counter” the increasing growth of unregulated markets.
Legislation Targeting Unlicensed Gambling
In addition to state gambling regulators and AGs using their current powers to target unregulated gambling, state lawmakers have also been proposing new legislation to curb the growth.
Lawmakers in Montana, Connecticut, New York, New Jersey, and Louisiana all passed bills this year aimed at criminalizing sweepstakes casinos. Louisiana Governor Jeff Landry vetoed the bill, which had unanimous backing in both chambers, citing the powers already held by the AG and the Louisiana Gaming Control Board to shut down the platforms. The state subsequently issued cease-and-desist letters to 40 companies accused of violating state gambling laws.
Several other states have also considered, or are still considering, legislation that would increase the penalties on unlicensed operators. Most notably, a bill in California proposes banning gambling platforms that utilize a dual-currency system to bypass the state’s laws against online gambling.
Tribal Groups Also Call for More Action by Authorities
Tribal groups have also called for state and federal authorities to stop the spread of unregulated gambling. This week, it was announced that tribal gaming generated a record high of $43.9 billion in the fiscal year 2024. Still, tribal leaders claim that prediction markets and unregulated gambling sites are a threat to the continued growth of tribal gaming.
More than 60 tribal groups submitted amicus briefs to courts opposing the expansion of sports prediction markets at Kalshi, while the groups have also supported legislation targeting sweepstakes casinos and offshore betting sites.
While the fight between the various gambling groups continues, states are collecting more taxes from gambling, tribes are generating more revenue, and both licensed and unlicensed betting companies are seeing bettors gamble in higher numbers.
