Bones Or Clams Or Whatever You Call Them
Black market gambling sites are widespread and firmly rooted, meeting specific demands that regulated markets struggle to address.
The Bulletin Board
THE LEDE: How big is the offshore gambling market?
ROUNDUP: NE mobile betting bill; Caesars adds 2 to board; Canadian provinces issue sports betting RFP; High 5 gets another C&D; AR iCasino bills.
QUICK HITTER: Maryland online casino effort is only mostly dead.
VIEWS: Two reasons why online casino bills have stalled.
AROUND the WATERCOOLER: A critical difference between regulated and unregulated gambling.
STRAY THOUGHTS: Don’t fix everything; fix one crucial thing.
SPONSOR’S MESSAGE - Yes, Sporttrade is indeed a prediction market. Always has been.
The Lede: Sizing Up the Offshore Gambling Market
A report on the size of the illegal gambling market was highlighted during the recently concluded NEXT.io conference in New York. The report, conducted by Blask, which performs AI-driven market research, was commissioned by NEXT.io.
The report reached interesting conclusions, although STTP is still not wholly convinced of the methodology, which the report claims has “up to a 95% accuracy” for major brands and “up to 85% accuracy” for emerging brands.
So, what did the Blask report find?
Of the 277 brands in the US, Bovada is the most popular brand. Zero onshore sites crack the Top 5 in regulated states.
Onshore brands dominate some regulated markets, with zero offshore sites in the Top 5 in Pennsylvania, Michigan, West Virginia, or New Jersey. In Connecticut (limited to three regulated brands), Bovada is third, behind FanDuel and DraftKings. BetOnline ranks fifth.
Offshores do better in other regulated states, particularly Florida, where Hard Rock has a monopoly (see image from Blask report below):
The JMP Securities team also looked at the black market in a recent research note. JMP found the offshore sports betting market (offshore + bookie) was estimated at $163 billion in handle and $9.8 billion in revenue in 2024. This figure surpasses the $150 billion legally wagered in the same period, highlighting the black market's substantial size.
As JMP notes, legalization may shift players to regulated sites, but it doesn’t eliminate the black market, which caters to players betting on credit or cryptocurrency — Approximately 23% of wagers in 2024 were placed through offshore accounts or online bookies, even in states with regulated sports betting, per JMP.
JMP found some movement to legal books from existing offshore customers (10% handle decline post-legalization in states like Ohio) but estimates only 10-20% of the offshore market (excluding bookies) is capturable by legal operators. JMP found no inclination to shift to legal options from bettors who use bookies due to advantages like anonymity, credit betting, and higher limits.
The average wager size was also considerably different:
Bookies - $142
Offshore sportsbooks - $56
Regulated Sportsbooks - $44
STTP Thoughts: The findings from Blask and JMP point to illegal gambling being too vast and entrenched for regulation to eliminate. At best it can put a significant dent in it.
Roundup: NE OSB Bill; Caesars Board; Canadian Provinces Issue OSB RFP; High5Games C&D; AR iCasino Bills
Nebraska mobile betting bill makes progress: A mobile sports betting bill, LR 20CA, that would put mobile betting on the 2026 ballot will be considered in the Nebraska Senate. Per iGaming Business, now that it has passed the Senate General Affairs Committee (Nebraska is a unicameral legislative body), “It must get a two-thirds majority on each of three votes on the Senate floor to pass.”
Caesars adds two directors to its board: From Rege Behe at CDC Gaming Reports: “Caesars Entertainment has added two independent directors to its board – Icahn Enterprises General Counsel Jesse Lynn and Chief Financial Officer Ted Papapostolou – who will join the board immediately, subject to customary regulatory approvals.” As Earnings+More noted, there are some rumblings that the appointment of board members at the request of activist investor Carl Icahn could end with Caesars spinning off its digital division, something CEO Tom Reeg hinted at during the company’s recent earnings call.
Two Canadian provinces issue RFP for national sports betting solution: From Mark Keast at Casino.org: “The British Columbia Lottery Corporation (BCLC) and Atlantic Lottery Corporation (ALC) have partnered up for a new “national sports betting solution” with an open invitation to other provincial crown corporations to join them.” The RFP closes in late April. Complicating matters is the recent partnership between Kambi and FDJ Group in Ontario. Per the press release, “Kambi has signed a novation agreement providing for FDJ Group to assign and Kambi to assume FDJ’s contract with Ontario Lottery and Gaming Corporation, enabling Kambi to replace FDJ as OLG’s long-term sports betting partner.”
High5Games gets a second cease-and-desist letter: Earlier this week it was VGW that received “The Letter” from the Maryland Lottery & Gaming Control Agency (MLGCA) and now it’s High5Gaming’s turn. Per Daniel Wallach, “Maryland has sent a cease-and-desist letter to sweepstakes casino operator High Entertainment LLC, doing business in MD as “High 5 Casino,” accusing it of “offering and conducting online gaming activities in Maryland without legal authority to do so.” Recall, High5Games recently had its license suspended in Connecticut and is facing more than 1,000 criminal charges for offering illegal gambling.
Arkansas bills legalizing online casino (and banning sweepstakes): As STTP has been saying about Arkansas, “Watch this space.” Legislation in Arkansas SB524 and HB1861 would legalize online casino and prohibit sweepstakes. Licenses would run through the state’s three casinos.
SPONSOR’S MESSAGE - Kambi is the industry’s leading independent provider of premium sports betting technology and services. Trusted by dozens of operators worldwide, each benefitting from the power of Kambi’s global network, Kambi has a proven track record of giving partners the decisive competitive edge required to grow and outperform the market.
As the home of premium sports betting solutions, Kambi offers an expansive product portfolio that caters to the evolving needs of operators and players alike. At its core is Kambi's flagship Turnkey Sportsbook, renowned for its scalability, flexibility, and unrivaled track record of delivering world-class betting experiences globally. Complementing this are Kambi’s cutting-edge standalone products: Odds Feed+, Managed Trading, Sportsbook Platform, Bet Builder, Esports, and Front End.
Quick Hitter: Can Online Casinos Sneak Into MD’s Budget?
March 17 was the deadline for bills to pass their chamber of origin in Maryland, which means the state’s online casino efforts are finished for the year.
Or are they?
Like most states, that deadline is far from firm. Maryland is facing a $3 billion budget deficit, and there is little agreement on how the bugest will fill the hole. That will likely end with 11th-hour compromises as the budget is sorted, perhaps reopening the door for online casino legalization to be part of a budget deal.
Views: Two Reasons iCasino Efforts Have Gone Sideways
One of my biggest critiques of the post-PASPA era has been the rush by states to legalize and launch online betting.
Over and over, the industry appeared in statehouses telling lawmakers that if they didn’t legalize betting, tons of money would go offshore, and consumers would be at the mercy of unscrupulous operators. As I’ve argued, there was no need to rush — slow is smooth, and smooth is fast. That money had been going offshore for years, so what is another 6-12 months?
My position — getting it right is more important than getting it done fast — was rarely adopted, and the “we need to have the industry up and running yesterday” crowd largely prevailed.
Sports betting is a massive opportunity, but the long-term play was that sports betting would also lead to online casinos. Sports betting was the stepping stone. The belief was that states would see the economic benefits from sports betting and quickly move to add online casinos to the list of authorized gambling products.
But like a child rushing through a math test, mistakes were made. The industry unwittingly chose short-term sports betting gains, which have led to long-term online casino pains.
Online casino legalization was already an uphill battle for many reasons, from perception to cannibalization concerns to a lack of a unified industry voice. the rush made it worse.
I would point at two specific areas where the industry shot itself in the foot regarding future online casino expansion:
Untethered licenses — Untethered licenses have undermined the economic benefits for existing gambling establishments and muddled future online casino expansion by encouraging untethered casino licenses.
No limitations on marketing — The lack of marketing guardrails has fueled excessive promotion, alienating consumers, providing critics with piles of ammunition about the industry’s excesses, and prompting stricter regulations that now hinder the industry's push for online casino expansion.
Both points are worthy of a feature column, so look for those in the future.
SPONSOR’S MESSAGE: Vixio, a leading RegTech provider for gambling compliance, has released its 2025 U.S. Sports Betting and iGaming Outlook.
As of January, Vixio predicts the U.S. online sports betting market will be worth $24.8bn to $29bn by 2028.
Download your copy of the U.S. Sports Betting and iGaming Outlook here.
Who is Vixio? Vixio takes the heavy lifting out of regulatory monitoring to help mitigate risk and uncover growth opportunities. Vixio’s award-winning GamblingCompliance platform is trusted by the world’s biggest gambling brands for insights into specific requirements in 180+ jurisdictions to stay current with the ever-evolving gambling regulatory landscape.
Around the Watercooler
Social media conversations, rumors, and gossip.
As myself and others have warned, unregulated gambling operators engage in behavior that would never fly in the regulated market:
In last week’s feature column, I criticized the euphemistic way gambling has been repackaged, and as the LinkedIn post below highlights, the guardrails exist for a reason:
Stray Thoughts
I came across this tweet recently, and it resonated with me.
This is how I instruct martial arts (using the Hierarchy of Correction) and how I try to distill information in this newsletter. Focus on the most important thing for the specific audience, then move on.
As I previously wrote:
“The Hierarchy of Correction is an exercise in prioritization. I see numerous things someone could improve, but I can’t bombard and overload them with a long list of critiques. They need simple, useful corrections. As such, I focus on a single correction (at most two) that will give the person the greatest immediate improvement and lay the foundation for future improvements.
“[…]
“What does any of this have to do with the gambling industry? Quite simply, I see a lot of paralysis by analysis in two spheres: the responsible-problem gambling and regulatory spheres.
“Both groups routinely focus on and prioritize the wrong things, and neither considers the unintended consequences of the habits they are reinforcing.”