Gaming Commission asks feds to shut down illegal gambling

Gamblers in Massachusetts have a full menu of wagering options to choose from these days: physical casinos, sports betting in person or online, and the state lottery, which some officials are itching to bring online as well. One thing not on the menu, Bay State regulators want to make clear, is illegal gambling.

Members of the Massachusetts Gaming Commission are going to send a letter to US Attorney General Merrick Garland, asking the Justice Department to do more to combat illegal offshore sports books and online casinos. These operators, the commission agreed to write in the letter, “often take advantage of the legalized landscape in jurisdictions such as Massachusetts to attract customers to their products.”

The commission members decided in a meeting Tuesday to join seven other states – Colorado, Louisiana, Michigan, Mississippi, Nevada, New Jersey, and Illinois – calling on the federal government to crack down on the operators.

Commission chair Cathy Judd-Stein said Massachusetts has led the country in encouraging responsible gambling that prioritizes consumer protections.

“We as a commission also have recognized along the way that, as regulators, we must strike a balance and policymaking to ensure that our new regulated market here in Massachusetts advances the well-being of all residents here on working to not just compete with the illegal market, but also put it out of business,” she said.

Gambling is now big business in this famously puritanical state. Its three casinos brought in $1.13 billion in gross gaming revenue last year, according to the American Gaming Association. Sports wagering in April saw in-state sports bets of almost $580 million, mostly from online betting, generating about $59 million in taxable gaming revenue.

Regulators and the gaming association do not want to see that money jeopardized. According to a report last year from the association, Americans bet more than $510 billion each year with illegal and unregulated operators.

This translates into significant lost revenue, undermining “the considerable economic benefits that come with regulated gaming,” the gaming association report says. “The scale of the tax loss is enormous: more than half of all potential state gaming tax dollars are lost to unregulated operators.”

Aside from the dollars and cents question, regulators are also troubled by illegal operators because they lack protections like age verification requirements, controls to prevent money-laundering, and guarantees that customers will receive fair payouts.

Generally, disrupting illegal gambling operations falls to the Justice Department. In before the US House Committee on Oversight and Government Reform in 2015, Joseph Campbell, the assistant director of the FBI’s criminal investigative division, said the agency “carefully used its limited resources to focus its investigation and prosecutions of Internet gambling on those groups engaged in egregious criminal conduct.” 

Online gambling poses a tremendous risk of illegal and fraudulent activity, Campbell said. Because it is easier for criminal actors to hide their identities, online casino schemes bear even more risk for the player than an in-person casino, he said.

Eight years later, a letter sent on April 28 by the states beseeches the Justice Department to move the issue up its to-do list.

“The many significant threats posed by offshore illegal gambling cannot be addressed by states alone and, therefore, require heightened federal attention and engagement,” they wrote. “We strongly encourage the Department of Justice to prioritize investigation and prosecution of these offshore sites, and stand ready to provide any assistance that we can as state gaming regulators.”

Commissioners considered and approved minor edits to their letter on Tuesday. Commissioner Nakisha Skinner asked Judd-Stein if there is any information on current Justice Department efforts to combat the illegal gaming issue. The Justice Department did not respond to a request for comment from CommonWealth on Tuesday.

”I think that we might not know,” Judd-Stein said. “I imagine there are efforts underway. But they might not be able to reveal them to us.”

JENNIFER SMITH

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