In the shadows of the burgeoning legalized sports betting landscape, a darker narrative unfurls, untouched by the glow of legitimacy that bathed the United States following the historic 2018 Supreme Court verdict on the Professional and Amateur Sports Protection Act. The Act’s dissolution was intended to herald a fatal blow to the seedy underworld of black market betting, yet in a twist befitting a suspense novel, that promise has gone unfulfilled. The players in this ongoing drama? No less than 38 states and the capital itself, Washington, DC, each grappling with the specter of illicit wagering within their borders.
Despite New Jersey’s embrace of both iGaming and online sports betting, a grim portrait has emerged of rampant, unyielding black market betting. Its twin, New York, alongside Minnesota—a state yet to legalize either form of gambling—join New Jersey in this clandestine dance, their stages awash with billions in illegal bets. The protagonists in this particular chapter are the Campaign for Fairer Gambling (CFG) and the cutting-edge findings from a Yield Sec report. An alarming $40.92 billion in bets sluiced through the veins of unregulated internet casinos and sportsbooks, a staggering $9.5 billion of which traced back to the trio of New Jersey, New York, and Minnesota.
“The dominance of illegal online gambling operators remains unchallenged despite the expansion of legal gambling,” lamented CFG’s architect Derek Webb. His statement spoke to the futility of well-meaning legislation, regulation, and tax incentives. “Sector-friendly legislation, regulation, and tax rates have not made much of a dent.”
Perhaps more perplexing is the case of Minnesota, ranking high on this dubious list without even sanctioning iGaming or sports betting—a testament to the resilience of black market operations. New Jersey and New York, meanwhile, despite stringent regulations and robust betting handles, are theatrical stages where over 800 illicit operators perform their audacious acts, brazenly indifferent to the law.
The unfolding saga brought to the fore the impassioned voice of CFG’s Webb, advocating for a narrative twist: federal oversight. This, he argued, could be the turning point needed to dampen the persistent flames of black market betting.
“This is one reason why we need federal involvement in the oversight of online gambling. We are eager to equip policymakers with real, reliable data so that we can have a more informed, balanced debate, and ultimately smarter gambling policy,” Webb pressed, the urgency in his tone unmissable.
Valid his claims might be, as gaming companies often employ a narrative to state-level policymakers and regulators: the tale of how residents, hidden from the eyes of the law, gamble with offshore entities. The bait laid out is simple: legalize, and the state will see increased protection for consumers and a swelling of its coffers with tax revenue. Yet New Jersey and New York stand as cautionary tales, defying the logic that legalization solely might snuff out the black market’s persistent flame.
The underbelly of this entire tableau is the staggering data on black market betting. Minnesota funneled a behemoth $1.5 billion into the maw of unregulated iGaming forums, coupled with an additional $929 million to illegal internet sportsbooks. A serious cause for concern, indeed, but the plot thickens when one’s gaze shifts to New Jersey and New York. In the former, bettors fed nearly $1 billion into local bookies and outlawed online sites, alongside $719 million to unregulated online casinos. Even more staggering is New York’s $3.4 billion expenditure on unrecognized internet casinos and its $1.9 billion on illicit sportsbooks—an ode to the siren song of black market betting.
