35 PUBLIC GAMING INTERNATIONAL • SEPTEMBER/OCTOBER 2022 For example, regulations in Connecticut (applicable to “electronic wagering platforms,” which include iLottery games and lottery sports betting, and apply also to commercial sports betting operators), require that mobile and online wagering platforms operating in Connecticut, among other things: - Allow prospective patrons to place themselves on a voluntary self-exclusion list and thereby be prohibited from establishing an internet gaming account or participating in wagering on internet games or retail sports wagering; - Allow patrons to establish daily, weekly, and monthly wagering limits; - Allow patrons to establish daily, weekly and monthly deposit limits; - Allow patrons to establish limits on the time they can remain logged-in to the lottery’s electronic gaming platform; and - Notify the patron when his/her lifetime deposits exceed $2,500, and thereafter prevent the patron from wagering until the patron acknowledges the notice and affirms that he/she has the capacity to establish responsible gaming limits (failing which, the account shall be closed), and repeat such notification every six months thereafter. Similar responsible gaming measures are in place in other states in which the state lottery offers electronic instant game products via a website and/or mobile app, such as Michigan, New Hampshire, Pennsylvania, Rhode Island, Virginia and Washington D.C. Indeed, Virginia establishes a maximum deposit amount during any 30-day period, regardless of player preference. However, detailed means of protection such as these are not available to those who participate in illegal, unregulated online gaming in the United States. While unregulated online gaming operations are often criticized for not paying taxes or otherwise contributing to good causes, it is not noted as often that they also lack the robust player protections required of legal state lotteries and licensed and regulated commercial operators offering their products online. Still, illegal, unregulated operators continue to operate with remarkable freedom in the United States. For example, notwithstanding the lack of protections and regulation, and failure to contribute to state revenues or good causes, H2 Gambling Capital Director David Henwood estimated in December 2021 that the $1.4 billion in projected gross gaming revenue from legal U.S. sports betting for 2021 would be just 8% of the estimated $17 billion in annual revenues from offshore states accepting wagers from U.S. players. In other words, in regard to online sports betting, far more (almost nine times more) is wagered via unregulated channels lacking robust player protection than is wagered via licensed and/ or regulated means which address responsible gambling seriously. More can and should be done to shut down online gaming operators taking wagers from players in the United States illegally. In a letter to Attorney General Merrick Garland dated April 13, 2022, the American Gaming Association (“AGA”), which represents the U.S. casino industry) sought the support of the Department of Justice in enforcing U.S. federal laws against illegal operators offering gambling products in the U.S. The AGA wrote: [A] vast illegal sports betting market continues to exist through offshore websites, which have established well-known brands … that operate with a high degree of visibility and are readily accessible to every American with a smart phone or Internet connection. These illegal sites also enjoy many competitive advantages that allow them to offer better odds and promotions and ignore any commitment to responsible gaming because they do not pay state and federal taxes or have comparable regulatory compliance costs and obligations. … Similarly, illegal online casinos operate openly and often target U.S. customers through paid advertising. These illegal sportsbooks and casinos create numerous societal costs. In addition to violating the law, the games offered by these sites do not meet testing or regulatory standards to ensure fair play and payouts, age-verification, or security of personal and financial data. Jurisdictions with authorized gaming implement rigorous responsible gaming protections and widely offer self-exclusion lists to assist users who may have difficulty controlling their play – but clearly the illicit platforms do not implement such lists and as a result, the most vulnerable users are likely to end up using these options. Illicit gambling operations have also been known to at times simply disappear, walking away with their customers’ funds in the process. Our current state-based licensing and regulatory regime ensures this cannot happen in the legal market. [T]he pervasiveness of this illicit activity requires more sustained attention and action from the Department. While prosecutions and convictions may be difficult to secure, the AGA firmly believes that the Department can make a strong and meaningful statement by investigating and indicting the largest offshore operations that openly violate federal and state laws. This action would provide much-needed clarity that these websites are criminal enterprises, which can help to deter the American public from visiting these sites and prompt businesses to take appropriate action to ensure they are not supporting them. Further, more can be done by all stakeholders in this regard. In addition to seeking increased enforcement efforts from the Department of Justice, state lotteries can push for enhanced efforts by state law enforcement authorities to act against illegal operators. (Most illegal operators do not have assets or personnel in the United States, however, making enforcement actions – such as those recently taken against illegal lotteries operating in Spain, Portugal and the UK – difficult.) State lotteries can also increase their cooperation with their nonprofit State Councils (that operate as Affiliates to the National Council on Problem Gambling in 35 of the 48 states with legalized gambling), to educate prospective players about the dangers associated with illegal gambling operations and encourage regulated gambling and their related responsible gaming services. The illegal market benefits no one but the illegal operators themselves. In summary, while the advent and expansion of online gaming provides enhanced opportunities to protect players and promote responsible game play, the policies and procedures required of U.S. state lotteries and licensed commercial operators in the U.S. will not be effective overall if the majority of online gaming occurs via illegal, unregulated sites and mobile applications which do not offer robust protections or, in some cases, any protections at all. More should be done by federal and state law enforcement authorities, as well as other industry stakeholders, to stop illegal operators from taking wagers from persons in the U.S. As stated by Richard Bateson, Chief Commercial Officer, JUMBO Interactive, at a recent PGRI panel: “We know what works to promote purchases and we also know our at-risk players. How do we help this small population? It’s actually easier with digital than at retail. We owe it to our players and communities to offer safeguards that will protect them.” “More can and should be done to shut down online gaming operators taking wagers from players in the United States illegally.” Continued on page 72
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