Big US Sports Betting Busts In 2016 Serve As Backdrop For Legalization Effort

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illegal sports betting

Organizers of an American Gaming Association conference on June 30 advocated for the legalization and regulation of sports betting in the United States, for which the association said it will formally lobby Congress as early as the beginning of 2017.

The rationale for such a legal framework, which everyone from the U.S. Conference of Mayors to NBA commissioner Adam Silver has called for, is grounded in part in the idea that it would curb the proliferation of illegal sports wagering, and the resultant criminal activity often associated with such enterprises.

This argument begs the question: Just how widespread is illegal sports wagering?

As if on cue, Brooklyn (New York) District Attorney Ken Thompson announced on the morning of the June 30th conference that his office had leveled a 57-count indictment against one of the largest illegal sports gambling rings ever prosecuted the United States. The four-person sports betting operation allegedly took in more than $900 million in bets in 2015 alone.

Illegal sports betting by the numbers

The AGA estimates sports bettors wagered approximately $145 billion illegally in the United States in 2015. Other estimates of the annual illegal U.S. sports betting handle range in size from $80 billion to $380 billion. Whatever the true size of America’s illegal sports betting market, it dwarfs the $4.2 billion in legal wagers that Nevada sportsbooks accepted during that same time span.

Where and how are some of these billions being bet illegally?

An examination of nearly a dozen sports gambling busts in the first six months of 2016 alone indicates that illegal sports betting activity is happening consistently, is facilitated through a complex mixture of money laundering, front businesses and offshore websites, and often involves additional criminal activity not related to sports betting.

U.S. authorities have uncovered these rings of widely varying size and scope across several states, including New York, Massachusetts and California (two additional sports betting busts also occurred in these states in late 2015). There are likely other indictments against sports betting rings currently under seal as well as other pending investigations that have not been made public.

While the criminal probes to bring down these gambling rings are keeping law enforcement busy, they appear to constitute a Sisyphean task of sorts, eradicating only a small fraction of the illegal activity taking place, and doing little to curb the continued existence of illegal sports wagering.

Sports betting busts in 2016

The following list does not include arrests, seizures or raids occurring prior to 2016 that resulted in criminal verdicts or sentencings in 2016. It also does not include the multiple arrests, seizures or raids that took place against non-sports gambling rings thus far in 2016.

Other ‘illegal gambling’ in 2016

Traditional sports betting isn’t the only sports-related gaming product to come under fire from authorities in 2016.

Attorneys general in Texas, Tennessee, Mississippi, Hawaii, Idaho, Alabama, Vermont and Georgia have each opined in the past six months that daily fantasy sports constitutes illegal gambling. There have been no actual charges brought against any DFS company, however.

Illinois AG Lisa Madigan released an opinion similar to those states in late 2015. FanDuel and DraftKings are both engaged in court cases pertaining to DFS’ legality in that state.

Mississippi and Tennessee’s state legislatures promptly passed bills legalizing DFS, and Texas AG Ken Paxton reached a settlement with FanDuel where the operator agreed not to operate in the state.

While New York’s legislature recently passed a bill legalizing DFS in response to a settlement agreement with AG Eric Schneiderman, some foresee that the bill could face a constitutional challenge from opponents.