We'll Get Around To It

The DOJ response to a request from state regulators to ramp up pressure on illegal offshore sports betting and online gambling operators was little more than a diplomatic brush off.

Aug 31, 2023

NEWS: DOJ throws state regulators a bone after request to “prioritize investigations into offshore sportsbooks and online casinos.”
NEWS: A Massachusetts tribal casino is back on the table, as the Mashpee Wampanoag and the city of Taunton are in discussions.
NEWS: Tennesee’s new tax on handle is either good for operators or good for bettors, but it can’t be both.
NEWS: Missouri sports betting update: Legislative stalemate leads to ballot initiative chatter.
AROUND the WATERCOOLER: AGA touts the arrest of an offshore sportsbook operator, and Bet365 is 18+ in Kentucky.
STRAY THOUGHTS: From a certain point of view.

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DOJ Responds To Offshore Betting

The Department of Justice has responded to requests from state regulators calling on the agency to crack down on illegal online gambling. In a letter posted to X by the Nevada Gaming Control Board, the DOJ wrote in part:

“The Department takes seriously the issue of illegal gambling, including illegal online gambling, and continues to successfully investigate and prosecute illegal internet gambling. The FBI works hard to establish and maintain strong partnerships with both public and private entities to combat illegal gaming. The Department appreciates the adverse illegal gaming has on individuals and communities and will continue to use all available tools to detect, investigate, and prosecute illegal activity.”

Essentially, the DOJ friend-zoned the states. Telling them, ‘We’re already working on it.’ Left unsaid was, ‘There’s not much else we can do.’ For example, I recently wrote about the arrest of Richard Sullivan, who was indicted 13 years ago for his role in running in an offshore sports betting ring. That’s considered a win in the fight against offshore gambling - and there are very few wins in the history of online gambling.

And as I wrote last year, Shutting Down Illegal Gambling Is Harder Than You Think:

Even when it’s illegal machines, bookies, or internet cafes on U.S. soil, victories are few and far between. They are also expensive, and after a successful prosecution, another black-market operator is always ready to step up to the plate.
When illegal gambling is headquartered offshore, the DOJ has had little success combatting illegal gambling, and there are not one or two but a dozen new players ready to fill the void.
Its greatest success was shutting down the major US-facing online poker sites on April 15, 2011, a day known in the poker community as Black Friday. However, Black Friday comes with an “Al Capone” caveat; the DOJ was able to make its case against the founders and key personnel of the sites based on bank fraud and money laundering charges. Without the assistance of a former payment processor (Daniel Tzvetkoff), there is likely no Black Friday.

Massachusetts’ Long Road to a Tribal Casino

The Mashpee Wampanoag tribe has been trying to open a tribal casino in southeastern Massachusetts since 2015, and after eight years, it looks like the dream might become a reality.

The tribe is currently in talks with the city of Taunton to start work on an interim project that will later transition to the original plans for a resort casino. The tribe would also be able to offer sports betting should the casino come to fruition.

Because of the possibility of the tribal casino, the Massachusetts Gaming Commission has sat on one of the three resort casino licenses it was authorized to award.

However, with the Mashpee Wampanoag project, there is always a catch. Taunton Mayor Shaunna O’Connell stated, “The tribe has not met their financial obligation to us for several years. To move forward, they need to honor their previous commitments.”

The story of the First Light Casino is one of the craziest in recent memories, as it includes ping-ponging decisions by the Department of Interior (over three administrations) concerning the tribe’s federal recognition, a lawsuit by local residents, the tribe going into massive debt, and the conviction of former Mashpee Chair Cedric Cromwell on bribery charges related to the casino.

The DOI placed the tribe’s land in trust in 2015. It rescinded that decision in 2018 following a successful lawsuit by Taunton residents. In 2020, District Court Judge Paul L. Friedman stepped in, calling the 2018 DOI decision “arbitrary, capricious, an abuse of discretion and contrary to law.” The DOI dropped its appeal of the ruling in 2021. In 2023, another District Court ruled against the Taunton residents, who filed an appeal with the US Court of Appeals - so this isn’t over yet.

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The Outlook in Tennessee

Eilers & Krejcik Gaming posted an interesting chart in a recent edition of the EKG Lines last week. The chart (seen below) looks at the different outcomes of Tennessee’s newly imposed tax on handle, which, as EKG points out, is based on the hold percentage.

A lot has been made of how the handle tax will impact state tax revenue collection, but as EKG points out, the real impact is at the operator level. In its takeaways, EKG said, “At the extremes, holding just 4% means operators would be paying tax at the equivalent of nearly 50% of GGR. Does that make TN an unworkable market for lower-margin books like Circa or newcomer Prime Sports?”

Essentially, Tennessee has incentivized operators to boost their hold percentage, which might make Tennessee the SGP capital of the US.

You can Subscribe to the EKG Line here (I highly recommend you do).

Sports Betting Via Ballot Initiative in Missouri

With Missouri State Sen. Denny Hoskins saying he will continue to oppose a sports betting bill that doesn’t include VLTs and intimating that there is an insurmountable bloc of lawmakers willing to continue that fight when he leaves office at the end of 2024, pro-sports betting interests in the state are looking for a new path forward.

“Until the casinos are ready to come to the table and work on a solution and compromise, I don't foresee a path that a sportsbook would pass in the state of Missouri,” Hoskins said. “There's at least five or six different senators that feel the same way that I do and want to see both VLTs (video lottery terminals) and a sportsbook get passed.”

Enter the voters.

“I think that what we need to do is create a game plan where we work on an initiative petition process, which is a ballot initiative in Missouri, that would be ready for voters to vote on this issue in the November election of ’24,” St. Louis Cardinals President Bill DeWitt III said.

So, what’s the ballot initiative process in Missouri?

“Petitions proposing statutory changes must be signed by five percent of legal voters in any six of the eight congressional districts. Petitions proposing constitutional changes must be signed by eight percent of legal voters in any six of the eight congressional districts.”

The ballot initiative process is not the light lift it is in California, but it’s an easily achievable feat. Of course, it would still need to pass, and you can be sure opposition will be fierce.

A February SLU/YouGov poll showed just 35% support for sports betting in Missouri, but DeWitt said their internal polling numbers lean towards a positive outcome.

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Around the Watercooler

Social media conversations, rumors, and gossip.

As I suggested when I reported on the arrest of Sports Offshore principal Richard Sullivan on Monday, “It will be interesting to see if the American Gaming Association and the legal betting industry use Sullivan’s recent arrest to raise awareness/interest about the offshore market.”

Later in the day, AGA President and CEO Bill Miller tweeted the following:

Bet365 will be 18+ in Kentucky:

Not everyone is thrilled with the decision, but the 18 vs. 21 ~~nonsense~~ debate is something I covered in a recent feature article.

Stray Thoughts

Some food for thought before you wade into the next SGP, DFS, poker solver, or whatever debate on social media.

“Often we go through an entire conversation – or indeed an entire relationship – without ever realizing that each of us is paying attention to different things, that our views are based on different information.” ~ Douglas Stone