States Seek Action From DOJ Against Offshore Gambling Operations

Currently, the U.S. online gambling market is alive and well. Legal sportsbooks are operating in about 40 states, with 7 of those states also allowing online casinos to operate with the proper licensing. Given that online gambling has proven to be a great source of tax revenue for participating states, it makes perfect sense that efforts need to be made to protect that revenue.

There is a pesky issue that needs immediate attention. That issue involves offshore operators seemingly offering online gambling services through the "back door." This has prompted all of the State Attorney Generals that are representing each of the 50 states to seek help from the Department of Justice (USDOJ). A letter has been sent to Pam Bondi, the Nation's lead AG, asking the DOJ to shut down access to offshore operators. The letter states:

“We urge the USDOJ to coordinate with our offices to pursue injunctive relief and website seizures under federal law; seize assets and domain names of illegal offshore gaming operators; and coordinate with financial institutions to block unlawful transactions and dismantle the financial infrastructure supporting these enterprises.” 

It remains to be seen if Bondi will act in the affirmative.

What DOJ Actions Would Mean for Offshore Gambling Users

It's understandable why offshore gambling sites would be favored in the 10 or so states that have not legalized online gambling. It's equally understandable why iGaming (online casinos) enthusiasts would go abroad. What's not clear is why U.S. gamblers would use such sites when legal options are available. Regardless of one's motivation, it would seem it's in the best interest of all participating parties to say farewell to offshore options.

How might a shutdown of access impact gamblers? A lockdown on offshore online gambling sites would likely make it impossible for U.S. gamblers to access any funds they might have in offshore gambling accounts. They would not be in violation of any laws, but they would be left without any way to motivate operators to offer refunds. To be clear, this is the same level of risk offshore online gamblers have had to endure for more than 30 years.

Based on this information, U.S.-based offshore gamblers would be well-advised to shut down their accounts in case the DOJ decides to take up such action.

How Would a Lockdown Affect Offshore Operators

Shutting down offshore gambling operations would be a process. It would likely start with a directive from the DOJ for offshore operators to cease accepting U.S. customers. Enforcement would likely come in the form of threats to initiate federal asset seizures and transaction freezes. That could have a profound financial effect on some of the smaller offshore operations.

Will the DOJ take up this course of action? The letter issued to the DOJ outlines that states are missing out on substantial tax revenue from every dollar wagered abroad. Estimates put the loss of revenue at around $4,0 billion.

Protecting the interests of legal U.S. operations might be all the motivation the DOJ needs to take the appropriate action. A decision could be forthcoming in the very near future.