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Offshore Sportsbooks and US Gambling: A Public Concern?

Offshore Sportsbooks and US Gambling: A Public Concern?
Written by: GreenMcqueen

Online gambling in the US has vastly increased in popularity over the past decade. This has been highlighted by the growth of online casinos worldwide and the global online gambling market. The value of the gambling industry was approximately $53.7 billion in 2019 and is expected to rise to $102.97 billion by 2025. The increasing use of mobile devices has accelerated the scope of online gambling to a point where legislation of online gambling has become a near-impossible feat for policymakers.


When you combine this with the rise of offshore sportsbooks and casinos, one must address the question of whether online gambling has evolved to the point where it can be classified as a public concern, or should just be recognised as a source of entertainment for people, job creation and tax revenue for governments. 


This article will delve into the history of online gambling in the US, outline regulations placed upon online gambling, and detail the rise of offshore sportsbooks and casinos. 



History of Online Gambling in the US


With the rise of the World Wide Web, gambling enterprises ventured into cyberspace in the mid-1990s, expanding their operations globally. This allowed anyone with internet access to discover online platforms and wager using credit cards.


As online gambling gained momentum, the number of websites surged, reaching over 470 by 1999. However, the industry's infancy was spoiled by controversies due to its lack of regulation, resulting in concerns regarding fair play and money laundering. In response, the first online gambling legislation was enacted in the Caribbean towards the end of the 1990s.


However, the Department of Justice was compelled to intervene in what was quickly becoming a legislative and regulatory nightmare.



Regulation of Sports Betting in the US


In the 1960s, way before the internet was even conceived, a bill was passed which is today used to regulate online gambling. This is known as the Federal Wire Act. To combat organized crime, the bill prohibits the transaction of payments regarding sports betting across states.


It was not until May 2018 that sports betting became federally legal in the US. Individual states were given the power to change their own gambling laws after the Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA). Online sports betting is legal in 35 states, with Maine and Vermont launching legal sports betting in 2024 after the bill was passed in May 2022 and May 2023 respectively.


Of course, because the legality of sports betting in the US took so long to be even remotely established, Americans found a way to bypass restrictions to place bets on sporting events. This led to the rise of offshore sportsbooks.



Offshore Sportsbooks and Casinos


Offshore gambling websites pose a significant challenge for local governments. Because they operate outside the jurisdiction of U.S. gambling authorities, these offshore sportsbooks often avoid the regulations imposed on domestic operators. Offshore betting sites may not prioritize consumer protections or promote responsible gambling practices. Additionally, they are not required to comply with federal anti-money laundering regulations or fulfill financial obligations such as local taxes and licensing fees.


Furthermore, many offshore sportsbooks are situated in "tax haven countries," granting them unfair competitive advantages over domestic operators. By evading financial responsibilities, they can sustain their operations at lower costs, offer better odds and services to customers, and provide a wider range of gaming options. This situation undermines the integrity of legal, tax-paying gaming entities domestically.


The prevalence of offshore sportsbooks can present a serious risk to players, and undermine the value of legitimate domestic operators. Efforts to address these challenges often involve regulatory measures and international cooperation to mitigate the impact of offshore gambling on local markets.



Bypassing the Laws: How to Play on Online Betting Sites


Due to the limitations placed upon sports betting in the US over the last number of decades, Americans and offshore sites found ways to bypass the regulations. This included using modern payment methods so offshore sportsbooks could render the business anonymous


Prepaid Cards and Cryptocurrency


Numerous credit card companies offer prepaid cards, which are payment cards with a predetermined amount loaded onto the card itself. These cards are readily available for purchase online or at retail outlets. 


One key advantage of using prepaid cards is the anonymity they afford users. Since these cards are not linked to a personal bank account or sensitive information, individuals can make transactions without revealing their financial details. This anonymity reduces the risk of transaction denials by banks and safeguards against third-party access to personal information. As a result, this method has been seen as a perfect way to bypass restrictions.


Several offshore sportsbooks for us players also utilize cryptocurrencies for financial transactions, benefiting both customers and operators. Cryptocurrency transactions are secure and bypass financial institutions. Cryptocurrency gambling sites offer unique URLs for deposits, automated gaming outcomes, and instant payouts directly to players' wallets, omitting intermediaries. This system ensures anonymity and evasion from gambling restrictions on banking transactions



Online Gambling: A Public Concern Or An Innocent Pastime? 


It is fair to say that the hesitancy of the legislature to legalize sports betting in the US has led to more and more Americans seeking out betting sites to place wagers. However, since sports betting has been made legal in most states, top US betting companies have experienced revenue spikes. 


For regulators in the US, they must implement plans to curb this spike in online gambling before it reaches a saturation point. It is recommended that they look to the UK model of gambling regulation as a solution.

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