Black market gambling is thriving. So says Amy Howe of FanDuel, one of the premier legal gambling companies in the US. Illegal sites pose a growing threat on several fronts, Howe says.
Howe recently spoke at the Wall Street Journal’s Future of Everything Festival. She addressed the threats black market gambling sites pose to gamblers, governments and legal gambling businesses.
Marylanders turn to illegal sites while they wait
In Maryland, the slow process of creating a framework for mobile sports betting has likely pushed gamblers to the black market. Retail sports betting is live in Maryland and has been since December 2021.
For a couple of reasons, online sports wagering has gotten held up. First, creating retail sportsbooks was a priority of lawmakers. And second, the Sports Wagering Application Review Committee (SWARC) is awaiting the completion of a disparity survey aimed at deciding if anything should be done to increase the participation of minority- and women-owned businesses in the industry.
The SWARC had no update on where the survey is in the process during its last two meetings. It is scheduled to next meet on June 16.
As a result, bettors not wanting to commute to a retail Maryland sportsbook or drive to Washington D.C. or Virginia to bet online may turn to the black market.
Rise of the black market
The Professional and Amateur Sports Protection Act (PASPA), which criminalized gambling in all but a few states, helped to create the black market industry. In 2018, the Supreme Court struck down PASPA.
Justices cited its inability to quell illegal gambling in the U.S. The American Gaming Association (AGA) estimates black market gambling is worth $150 billion.
Even though 35 states and the District of Columbia have legalized various forms of gambling, the black market industry hasn’t faded. In Howe’s estimation, it’s gotten worse.
“There’s a massive black market that still exists. Hard to quantify exactly but probably to the tune of trillions of dollars. As that black market persists, the states aren’t getting the economic benefit of that. Consumers aren’t being protected.”
While a lot of daylight exists between the AGA’s and Howe’s estimations, the reality is that the black market has tangled itself insidiously with legal American gambling.
Consumers may not know they’re betting illegally
During her speech, Howe noted that consumers “might not even be aware that they’re betting illegally.” Her comments echo the AGA in a letter it sent to US Attorney General Merrick Garland.
Based on survey data collected by AGA, “74% of sports bettors say it is important to only bet with legal providers.” However, 52% continue to utilize illegal sportsbooks. Most of these consumers (63%) say they were surprised to learn that they were betting on the black market.
Maryland bettors wading into the online sports betting market, as Howe notes, encounter black market sites that, at least on the landing page, look essentially the same as legal, regulated sites.
Bovada is a good example. The major illegal offshore site offers bettors almost everything you’d expect from a legal site. Some of these “amenities” include responsible gaming supports, like a self-exclusion list for problem gamblers.
Like other black-market vendors, Bovada’s self-exclusion links are essentially dead links. They offer no real support. And like other illegal offshore sites, Bovada recently suffered numerous technical problems.
FanDuel playing the long game, Howe says
FanDuel has grown into an industry-leading sports gambling platform. Howe, who was appointed CEO in 2021, says the company plans to further invest in consumer protection products. These products will help gamblers manage and limit their activity and educate them on the dangers of gambling addiction.
Flutter Entertainment, FanDuel’s parent company, aims to have 75% of all consumers using responsible gaming tools by 2030. Howe summed it up.
“We believe we have to get this right in order to protect our business not just in the short term but in the long term.”
For the latest on online sports betting in the state, follow PlayMaryland‘s Live Updates page.