Michigan Pressures Department of Justice to Impose Stiff Measures Against Illegal Gambling

Jessica Aletor
By:
Jessica Aletor
08/05/2023/
News
Slots 7

Highlights

  • According to the American Gaming Association, the United States loses $511 billion annually to illegal gambling.
  • Michigan has joined six other top gambling states to write to the US Department of Justice.
  • In the letter, all seven states pressed for the enforcement of US laws against offshore illegal gambling.

Despite the massive revenue recorded from online gambling in Michigan and the 32 other states where iGaming is allowed, there’s no doubt the figures could be astronomically higher. The United States currently losses more to illegal offshore gambling than the country’s total tax revenue from retail and online casinos or sportsbooks annually.

Over the past one year, there have been concerted efforts to stem the tide of illegal gambling in the country. In Michigan, the MGCB recently strengthened its partnerships with the Department of Attorney General, securing multiple arrests and convictions. Now, the state is going a step further to tackle illegal gambling within its borders.

MGCB Joins Coalition of State Regulators Combating Illegal Gambling at National Level

The Michigan Gaming Control Board has teamed up with six other state regulators to successfully tackle illegal and offshore gambling across the country. This coalition came into effect in the last week of April as all states involved sought to bring an end to the operations of unlicensed sportsbooks and online casinos.

Colorado, Nevada, New Jersey, Louisiana, Illinois and Mississippi were the six other states that joined in the concerted effort. These states represent the jurisdictions where online gambling has been most successful in the country. The only notable exclusions were Pennsylvania and New York.

All involved parties sought to draw the attention of the country’s Attorney General to the rising spate of illegal markets and its continued threat to revenue from regulated gambling industries in the respective states. In addition, the coalition expressed the difficulty of tackling the gargantuan problem solely with individual resources and urged federal authorities to support in the fight against saboteurs.

States Urge Department of Justice to Provide Assistance in Curbing Offshore Gambling Nationwide

Michigan gaming authorities pressed their plea to the Department of Justice via a letter directed to Attorney General Merrick Garland. The letter was forwarded to the Attorney General’s office on April 28, and it rallied for national contribution to the fight against illegal gambling.

Executive Director of the Michigan Gaming Control Board, Henry Williams had this to say about the nature of the letter.

“In Michigan, strict laws and rules govern internet gaming and sports betting and provide consumer protections, promote confidence and ensure fair and honest gaming. We are willing to help the U.S. Department of Justice in any way we can as it pursues enforcement of U.S. laws against offshore illegal gaming enterprises that take advantage of our citizens.”

“State regulators like the MGCB ensure operators offer products that pass technical standards and testing, and we also require operators to comply with reporting requirements. Offshore operators flaunt state regulations and offer products that do not protect the public, which greatly concerns me and my fellow state regulators,” Williams further noted.

The letter highlighted some of the problems that unregulated and illegal offshore gambling sites pose to the country. Among others, the seven states noted that these wagering sites do not have age verification processes against underage gambling. Loss of tax revenue, absence of responsible gaming initiatives and potential money laundering activities were other dangers listed in the letter to the DOJ.

US Loses $13.3 billion in Annual Tax Revenue to Illegal Gambling, More Than Tax Revenue Generated in 2021

Since illegal offshore sites are not within the borders of any individual state, gaming authorities usually find it difficult to enforce rules on them or settle disputes between their residents and these operators. But even much worse, a massive amount of tax revenue is lost to illegal operators.

Reports from the American Gaming Association suggest that about $511 billion is gambled illegally every year in the US. This means that the country loses about $13.3 billion worth of tax revenue annually. For context, in 2021, licensed operators generated $11.7 billion as tax revenue. So, the US loses more than what it gains as tax revenue every year.

Speaking about the effect of this information, the CEO and President of the AGA said the following in a press release.

“Illegal and unregulated gambling is a scourge on our society, taking advantage of vulnerable consumers, skirting regulatory obligations and robbing communities of critical tax revenue for infrastructure, education and more. We have always known that the illegal and unregulated market is expansive, but this report illuminates just how pervasive it is.” 

Involving federal authorities is a solid step for Michigan and it will help consolidate on its recent onslaught against illegal gambling in Romulus and Delta Township.

Jessica is a news contributor to Gamble Online Michigan. She holds a Bachelor's degree in Economics but has over three years of experience working in the hospitality and gambling industry. Despite her core finance and investment banking background, she has been a casino feature writer for N1 Interactive Limited and multiple gambling affiliate sites. Her work has been featured on the bet365 blog, casino.zone and Max Force Racing. She spends her time between Michigan and California, staying up-to-date on the latest industry developments