Recent reports from the Campaign for Fairer Gambling (CFG) have unveiled a staggering $4.3 billion in illegal and untaxed wagers placed on the recent NCAA men’s and women’s tournaments. This figure represents nearly two-thirds of all bets made on these events, highlighting a massive underground betting market.
The analysis by YieldSec further revealed that over 70% of sports wagering-related social media posts and video content directed audiences to illegal betting operators, with an estimated 43.1 million people in the U.S., nearly 1 in 7, interacting with illegal gambling content.
Impact on Legal Sportsbooks and State Revenue
While March Madness was a lucrative period for legal online sportsbooks, generating $2.4 billion in wagers, the illegal betting platforms outpaced this significantly. The legal sports betting industry, which has grown rapidly since the Supreme Court legalized sports gambling in 2018, generated approximately $2 billion in tax revenue nationwide last year. However, states lose potential tax revenue when bets are placed illegally. This issue is compounded by online advertising that often blurs the lines between licensed and unlicensed sites, misleading consumers.
Regulatory Challenges and Proposed Solutions
Sports gambling is regulated at the state level in the U.S., creating a fragmented regulatory ecosystem. Currently, it’s legal in 38 states and Washington D.C., with four more states considering legalization. The rise in popularity of legal betting has inadvertently increased activity in illegal gambling. Coordinated action between states is suggested as a long-term solution to minimize illegal gambling and maximize tax revenue from licensed sportsbooks.
Enforcement and Monitoring Needs
The overwhelming presence of illegal gambling during major sports betting events indicates a need for prioritized enforcement and monitoring. Calls have been made for law enforcement at federal levels, including the Department of Justice and FBI, to crack down on illegal betting markets. The CFG, led by gaming industry veteran Derek Webb, advocates for bipartisan gaming reforms to enhance consumer protections and calls for federal oversight of online sports gambling.
Conclusion: A Call for Action
The findings from these reports are a clear call to action for both state and federal authorities to intensify their efforts in combating illegal sports betting. With billions at stake, the integrity of sports and the legal betting industry hangs in the balance. As the legal market continues to grow, so does the shadow of the illegal betting industry, making it imperative for an organized and robust response to protect consumers and ensure fair play in the world of sports betting.
