In worrying fashion, a report has recently surfaced that claims that the legalization of online gambling platforms leads to losses for consumers of up to 261%. While it has been claimed that legalization should erode the grip that offshore illegal platforms have on consumers, this report states that this is not the case.
A supplementary report released by the Campaign for Fairer Gambling (CFG) states that when states fully legalize online betting and gambling, taking into account illegal platforms, losses from consumers when gambling rise to a rather large 261%. The initial report, released in 2024 under the name USA National Online Gambling Report 2024, revealed that illegal online gambling accounts for fully 74% of the gross gambling revenue in America.
This is bad news for many proponents of legalization, as one of the lynchpins of the arguments for legalization is that offering legal alternatives to consumers will undermine illegal offshore platforms and bring tax revenue back to the states. This report seems to suggest that this is not the case, which might leave many wondering, what then, is to be done?
Is Legalization Fool’s Gold?
This report raises difficult questions about legalization and its efficacy. If illegal offshore platforms still operate in states with legalized online options, and consumers are suffering because of it, is legalization worth it? Thankfully, it seems as though the answer is a complicated yes, but a yes nonetheless. While the spike in gambling losses is worrying, legal online platforms that offer good bonuses, according to Erik King from Zamsino, are by no means where consumers are at most risk. Rather, it is still the illegal offshore operators that put consumers at risk.
Offshore platforms can operate outside of the rules set out to protect consumers. Because of this, they can dress themselves up to seem like a more appealing option, when in reality, their games might be more unfair, and they are unlikely to include responsible gambling tools or anything to make consumers think twice before spending their money. Essentially, offshore platforms not only have an unfair advantage over legal options, but they are also likely to be unfair for players.
An Unfair Advantage Coupled with Unfair Chances
Offering consumers the option to play at legal platforms is all well and good, but unfortunately, those platforms are bound by a number of rules and regulations, which offshore platforms simply aren’t. Legal and regulated platforms are bound to adhere to regulations and laws set out by the states, typically including things like:
- Responsible gambling warnings and links to gambling support services.
- Identity and age verification tools.
- Audits are conducted to ensure that their finances and security systems are in line with regulatory standards.
- Spending limits and responsible gambling tools, such as self-exclusion.
- Easy to understand terms and conditions around wagers and bonuses.
Offshore platforms, however, are not bound to abide by any of these rules. This means that they are free to promise and do whatever they want to lure players in. While in some cases this might be fine and players are safe, in other cases, these platforms can use nasty advertising and gamification techniques to trick people into playing longer than they should.
With such an unfair advantage on the side of offshore platforms, how are licensed operators to compete? What’s more, licensed operators have to spend a good deal of time ensuring that they are compliant, so the field is even more skewed, as licensed operators have spent time and money adhering to a system that seems unable to properly support them. So, what then is the answer?
Without Strong Deterrents, Offshore Platforms Rule
A key component of this puzzle is that illegal operators see no enforcement. Why would an operator spend time and money getting compliant when they can see that all of the other offshore platforms are doing as they please and receiving no consequences for their actions?
What is needed is strong deterrents that cause offshore platforms to be less appealing for operators to run. Bringing penalties and consequences to these platforms will reduce their number, increase the number of legal, regulated platforms, and theoretically reduce the huge 74% of gambling revenue in America from going to these offshore platforms.
Sadly, this is far easier said than done. Most areas do not have the technological know-how or ability to properly police their online ecosystems. Couple this with the fact that these offshore platforms have plenty of resources to put towards remaining untraceable, anonymous, and otherwise difficult to pin down and serve with consequences, and you have a heady mix that means that offshore platforms might continue to stay on top. So, what now, do we do away with legalization?
How Should The Offshore Epidemic be Countered?
Legalization is an important step, and doing away with it won’t stop the offshore platforms from thriving. Now that the genie is out of the bottle and even more consumers have tasted online gambling and betting, getting rid of the legalized platforms will likely drive an even higher percentage of gambling revenue towards offshore platforms. No, rather than getting rid of legalization, the systems that exist around legalization and support it must be strengthened. This could mean things like:
- Pursuing an aggressive and effective campaign of enforcement against illegal platforms and operators. While this might be expensive, will it be 74% of gambling revenue across the country disappearing overseas, expensive?
- Publicly educating people about the importance of responsible gambling and the dangers of playing at unregulated platforms.
- Providing stronger support networks for problem gambling. By gaining control of the market and funneling more revenue back into tax dollars, some of that money should go to helping victims of problem gambling.
- Greater transparency from legal platforms and operators. If these platforms are clear about the exacting standards that they uphold to keep consumers safe, it should put consumers at their ease and increase the draw to play on them.
Legalization Without Enforcement is Pointless
Legalization is an important step towards controlling the online gambling market in America, but it is pointless without stronger enforcement of those laws and regulations. By making a concerted effort to crack down on illegal offshore platforms and at the same time to educate consumers about the dangers of using those platforms, legal platforms should see a significant uptick in user numbers.
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