ICLE White Paper

Incentive-Compatible Solutions to Illicit Online Activity: Part 1 – Illegal Online Gambling

Executive Summary

Until recently, most forms of gambling were illegal in most U.S. states. Despite the recent wave of legalization efforts across many states, illegal offshore online gambling continues to thrive, due in part to factors like the convenience, variety of games, and attractive incentives that offshore apps and websites offer. Surveys and industry estimates suggest that Americans wager hundreds of billions of dollars annually through these illegal offshore sites, which remain popular even in those states where onshore gambling is legal—illustrating the limits of current regulatory efforts.

The prevalence of illegal gambling is partly a consequence of restrictive historical policies. For example, high federal excise taxes, especially combined with state tax burdens and regulatory requirements, raise prices and reduce payouts for legal sites, pushing consumers toward cheaper illicit alternatives.

Illegal offshore gambling siphons revenue away from U.S. businesses and governments, reducing tax receipts and limiting the economic multipliers that arise from regulated gambling markets. Offshore operators are also not bound by U.S. consumer-protection laws. Players risk losing their deposits if sites shut down or withhold payouts, lack legal recourse to resolve disputes, and may face inadequate security and responsible-gambling measures relative to regulated domestic platforms.

Traditional “stick” approaches—including high-profile crackdowns—have not eradicated illegal offshore gambling. Enforcement is hampered by enforcers’ lack of jurisdiction, as well as the existence of technological workarounds and persistent demand for illicit options. Instead of focusing primarily on prohibitions and penalties, authorities should ensure that gamblers have ready access to legal sites that implement harm-reduction measures (e.g., deposit and time limits, self-exclusion tools, and transparency). Beyond government enforcement, private actors—such as the operators of legal betting operations—might be given appropriately circumscribed authority to request that internet-service providers (ISPs) block illicit sites, thereby leveraging private incentives to curtail illegal gambling.

More importantly, lawmakers should consider eliminating federal excise taxes on the handle. This would do more than anything to close the price gap between legal and illegal operators, making authorized U.S. platforms more competitive, providing incentives for consumers to choose regulated options, and mitigating the illegal market’s allure. Combining tax reform, targeted harm-reduction measures, expanded self-help mechanisms, and private enforcement tools could help to create an environment in which legal gambling operations may flourish, and consumers will be better protected.

Introduction

Until recently, most forms of gambling were illegal in much of the United States, but millions of Americans nonetheless found ways to place wages. Some did so by visiting legal casinos in Nevada or on Indian reservations. Others participated in parimutuel betting at racetracks, which was also legal. The majority, however, participated in various forms of illegal gambling. Until 30 years ago, that meant office pools or bookmakers (“bookies”), or both.

The emergence of online gambling websites in the mid-1990s suddenly expanded the opportunities for illegal betting. Lacking available legal onshore options, many U.S. residents chose to use offshore gambling sites that are not licensed domestically. The ramifications have been widespread and continue to this day: despite the legalization of gambling in many states, millions of Americans wager billions of dollars illicitly through offshore gambling websites.

This white paper describes the various policy options available to reduce illegal gambling, using the methodology of law & economics to assess those options. It begins with an examination of the underlying causes of illegal online gambling. Section 2 discusses the harms that arise from illegal offshore gambling. Section 3 considers the current approaches policymakers have taken to curb offshore gambling, analyzing their successes and limitations. Section 4 considers alternative solutions, evaluating their potential. Section 5 considers the federal taxation of gambling, and potential reforms in that area. Finally, Section 6 offers conclusions and recommendations, emphasizing in particular the potential benefits of reducing federal taxation and using diplomatic channels to enhance the effectiveness of site blocking.

I. Illegal Online Gambling in the United States

In 2022, the American Gaming Association (AGA) commissioned a survey of roughly 5,200 Americans to understand their gambling habits.[1] The AGA survey results found that Americans bet around $400 billion annually on illegal online gambling sites. Of that, the AGA attributes roughly $60 billion to illegal sportsbooks and $340 billion to illegal online casinos. A recent survey by sportsbook aggregator Covers of 5,100 sports bettors in states where betting is currently legal found that about a third admitted to using at least one offshore sports-betting website.[2] Meanwhile, gambling intelligence company Yield Sec has estimated that approximately 75% of the gross gaming revenue earned in the United States in the first half of 2024 went to illegal offshore operators.[3]

As these data show, illegal online gambling continues to thrive, despite at least some forms of gambling now being legal in 38 states and the District of Columbia. Factors affecting this demand include:

• Convenience and Accessibility: The ability to gamble from the comfort of one’s home or via mobile devices in states where online gambling remains illegal.
• Variety of Offerings: Offshore sites often provide a wider array of games and betting options than regulated domestic platforms, including sports betting, casino games, poker, and eSports betting.
• Attractive Incentives: Bonuses, promotions, and loyalty programs offered by offshore sites are often more generous than those provided by U.S.-licensed operators, due to a combination of tax and regulatory burdens on legal sites that are not imposed on illegal sites.

More generally, illegal gambling is the result of historic and contemporary restrictive legal frameworks—especially the federal taxation of betting handles—that fail to align with consumer demand. This section will first consider the development of U.S. legal frameworks around gambling, providing historical context, and then offer a brief overview of the federal taxation of gambling. It concludes with a brief discussion of the current situation.

A. A Brief History of Gambling in the United States

The current pattern of legal and illegal gambling in the United States is largely a result of the shifting legal landscape of gambling of the past two centuries. Legal gambling is now a multifaceted industry—comprising state lotteries, tribal casinos, commercial casinos, “racinos,” and online and brick-and-mortar betting platforms. These operate under a complex patchwork of state and federal law.

Illegal gambling, meanwhile, emerged to fill the gaps created by prior laws. It continues, in part, due to inertia, but primarily due to a combination of legal restrictions and taxes, especially those imposed at the federal level. This subsection offers a brief overview of the historic and current laws, as well as other factors that have affected the development of legal and illegal gambling in the United States.

1.  Origins of gambling in the United States

Gambling arrived on the eastern shores of North America with the earliest European settlers. In England, from which many colonists originated, wagering on cards, dice, and other games was a familiar pastime.

Yet the American colonies were not monolithic in their attitudes. In Puritan New England, authorities discouraged gambling on moral grounds. They saw it as a frivolous activity that risked corrupting the soul and fostering sinful behavior, and the Massachusetts Bay Colony enacted the first colonial-era law against gambling in 1638.[4]

Despite this, lotteries early on became an essential method of raising revenue for public works, churches, schools, and even the fledgling institutions of higher education such as Harvard and Yale.[5] While frowned upon by some, these early lotteries were not clandestine operations; they were widely advertised, openly discussed, and legally sanctioned. Indeed, the American Revolutionary War was financed in part by a lottery organized by the Continental Congress, which raised $5 million.[6]

2. Criminalization and the rise of illegal gambling

By the early 1800s, the pendulum began to swing further from legally sanctioned gambling. While lotteries had financed much of the nation’s early infrastructure—including roads, bridges, and educational institutions—scandals involving misappropriated funds and rigged drawings eroded public trust.[7] These scandals were used to justify bans on private lotteries, while some state lotteries continued to operate.[8]

Pressure from prohibitionists led the federal government to enact a series of laws restricting the transportation of lottery tickets by mail, thereby ostensibly restricting access to lottery tickets in states where lotteries were banned.[9] This culminated in the federal Anti-Lottery Act of 1890, which broadened the definition of prohibited material to newspapers that contained lottery advertisements.[10] In response, the Louisiana Lottery Co. moved its operations to Honduras—an early example of using a foreign jurisdiction to avoid U.S. anti-gambling legislation—and Congress responded in kind in 1895 with a provision barring importation of foreign lottery materials—thereby terminating the business.[11]

The private betting that continued—on horse races, cockfights, or card games—often moved underground, as legal constraints on these other forms of betting tightened.[12] This would set a pattern: as legal gambling avenues closed, illicit ones flourished.

Rapid urbanization and industrialization in the late 1800s created new communities of wage earners looking for leisure and excitement, including gambling. This demand was met largely by illegal gambling operations, especially in big cities.[13] Gambling transitioned from riverboats and trains to saloon-based card rooms.[14] Numbers rackets run by organized-crime syndicates, and clandestine betting parlors proliferated.[15] Horse racing, once openly celebrated, faced moral crusades and state crackdowns, leaving only a handful of states with legal racetracks. Yet even these state-authorized tracks often coexisted uneasily with illegal bookmakers, who offered odds on everything from races to prize fights. Organized crime found fertile ground in the public’s enduring appetite for wagering, stepping in to provide illegal gambling services wherever legal outlets were lacking.[16]

In 1871, Jerome Park Racetrack, in Westchester, New York, introduced parimutuel betting machines for the first time.[17] In Paris Mutuels or “parimutuel” betting, there is no bookmaker; rather, funds are pooled, and odds vary in accordance with the amounts wagered on each outcome. The system spread rapidly across this United States. Despite the absence of a bookmaker and thus reduced likelihood of race fixing, however, states soon introduced prohibitions.[18] In a twist, the New York State Court of Appeals ruled that oral betting in the absence of a bookmaker or clerk did not violate the 1908 Hart-Agnew anti-betting law—perhaps a sop to the businesses that had developed around betting.[19]

As the country endured economic turmoil during the Great Depression, policy began to shift. Legal gambling venues became, once again, a fiscal lifeline. Nevada’s legalization of casino gambling in 1931 laid the groundwork for Las Vegas to become the world’s preeminent gambling destination by the post-war period.[20] Casinos, once seen as a vice-ridden novelty, became accepted as tourist attractions and revenue engines for Nevada. Organized crime elements initially facilitated the growth of Las Vegas casinos, but over time—and especially after the Nevada Gaming Control Act of 1959, which shifted regulation from the state Tax Commission to the Nevada Gaming Commission—these establishments were cleaned up and corporatized, appealing to middle-class vacationers.[21]

3. State and federal developments

The mid-1960s marked a shift in state gambling policy driven by revenue needs. New Hampshire’s 1964 introduction of the first modern state lottery catalyzed widespread adoption, with dozens of states following suit by the late 1970s.[22] Casino gambling expanded beyond Nevada when New Jersey legalized casinos in Atlantic City in 1976, establishing a regulatory framework through the Casino Control Act that became a model for other jurisdictions.[23]

The rise of tribal gaming in the 1970s and 1980s culminated in the landmark 1987 Supreme Court decision in California v. Cabazon Band of Mission Indians, which affirmed tribal rights to conduct gaming free from most state interference, so long as the state allowed some form of gambling.[24] Congress responded with the Indian Gaming Regulatory Act (IGRA) in 1988, creating a federal framework that classified gaming into tiers and required tribes to negotiate compacts with states for certain types of games.[25] IGRA’s passage, while providing a clear regulatory structure through the National Indian Gaming Commission, fostered complex state-tribal relationships through revenue-sharing agreements.[26] Tribal gaming evolved into a significant economic force, generating employment, infrastructure, and social services for tribal communities.[27]

Federal intervention in the post-war period initially focused on combating organized crime’s influence through the Federal Wire Act of 1961, which prohibited interstate telecommunications for sports betting,[28] and the Racketeer Influenced and Corrupt Organizations Act (RICO) of 1970, which strengthened prosecution tools against illegal gambling syndicates.[29] These measures, however, produced unintended consequences. They made legal sports betting harder to establish in states that might have considered regulated frameworks. With fewer legitimate outlets and stringent federal restrictions on interstate wagering, many Americans turned to clandestine operators.[30] Moreover, organized crime adapted by diversifying its methods and exploiting new communications technologies, creating an ongoing enforcement challenge.[31]

4. PASPA (1992–2018)

In 1992, Congress passed the Professional and Amateur Sports Protection Act (PASPA),[32] which effectively prohibited states from authorizing sports betting, except for those jurisdictions like Nevada that had pre-existing frameworks. PASPA reflected a federal desire to maintain the integrity of sports, but it also stymied the growth of legal sports wagering for more than two decades. Ironically, this helped to fuel a large illegal market serviced by offshore bookmakers and local illicit operations, illustrating again that restrictive policies often push demand underground, rather than eliminating it.[33]

The Supreme Court’s 2018 decision in Murphy v. NCAA struck down PASPA.[34] The decision cleared the path for states to legalize and regulate sports betting as they saw fit. Almost immediately, states from Indiana to Colorado enacted legislation authorizing sportsbooks at casinos, racetracks, and online platforms.[35] This rapid liberalization transformed the sports-betting market into a mainstream industry, replete with partnerships between sportsbook operators and major professional sports leagues.[36] To regulate these markets, states have employed a range of mechanisms, which may include formal licensing requirements, integrity monitoring, consumer-protection standards, and tax structures—resulting in a dynamic, competitive environment.

5. Online gambling, the UIGEA, and the 2011 DOJ opinion

The rise of the internet presented new challenges for federal and state regulators. Online casinos and poker rooms first sprang up in the late 1990s, with many operating from offshore jurisdictions. Initially, the  Interstate Wire Act of 1961 and other pre-internet statutes proved ill-equipped to govern this new frontier.[37] In 2006, Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA), which attempted to curtail illegal online wagering by barring financial institutions from processing payments related to unlicensed online gambling sites. While UIGEA did not make online gambling a federal crime per se, it complicated offshore platforms’ operations and led some to withdraw from the U.S. market.[38] Nonetheless, consumer demand persisted, pushing states to experiment with intrastate legalization.

A 2011 U.S. Justice Department (DOJ) memorandum, often referred to simply as the “2011 DOJ opinion” or the “Seitz opinion,” significantly reshaped the legal landscape for online gambling.[39] The DOJ memo reconsidered the scope of the Wire Act, which the DOJ had previously interpreted as prohibiting all forms of interstate online gambling. The 2011 opinion concluded that the Wire Act’s prohibitions were limited specifically to sports betting, thereby clarifying that non-sports betting activities—such as online lottery sales or other forms of online gambling, including poker—were not covered by the act when conducted solely within a state’s borders.

This reinterpretation did not legalize online poker or other forms of gambling, but it removed a major federal obstacle. States were thus free to explore intrastate online gaming platforms without fear of violating the Wire Act. This led to the subsequent licensing and regulation of online poker and other online gambling formats in states like Nevada, New Jersey, and Delaware.

6. Contemporary trends and legislative refinements

Today, the federal role in gambling tends to be limited to enforcement actions against illegal operators and oversight in areas like tribal gaming, in addition to federal taxation.[40] States, conversely, have become the principal laboratories of gambling policy. This division of authority reflects both constitutional design and practical necessity, as states are better positioned to calibrate gambling policy to their distinct demographic compositions, existing gaming infrastructure, professional sports presence, and localized political preferences.

Many states continue to revise their statutes, expanding their offerings beyond traditional casinos to include mobile sports betting and online casino games. The expansion of legal gambling products has also raised concerns about problem gambling and consumer protection, leading to legislative efforts aimed at supporting addiction-treatment programs, improving self-exclusion lists, and requiring online and offline operators to adopt responsible gambling programs.

B. Federal Taxation of Gambling

The second prong of federal involvement in gambling has been the imposition of federal taxes. Over time, these taxes—initially designed to combat organized crime and ensure revenue collection—have interacted with changing market conditions, including the rise of online wagering. As with other federal legislation, taxation has had perverse effects on the incentives to participate in illegal offshore gambling.

1. Wagering excise taxes

As already noted, alongside the growth of gambling markets in the mid-20th century, the federal government sought to stifle illegal betting and the involvement of organized crime. Early on, a key tool was the imposition of special federal taxes on wagers. In 1951, Congress passed legislation that included a federal excise tax on wagering, as well as occupational taxes on individuals engaged in the business of accepting bets.[41] These measures, codified in the Internal Revenue Code (IRC), imposed substantial tax burdens on bookmakers—especially those operating illegally. Initially, the wagering excise tax was set at 10% on the amount wagered, a rate set deliberately high so as to discourage illegal operations.[42]

This heavy taxation was intended to serve a dual purpose:

• Revenue Generation: The government collected funds from a market that continued to thrive underground, turning a previously untapped source of revenue into a fiscal asset.
• Crime Deterrence: By making it risky and expensive to conduct illicit gambling operations, federal authorities hoped to drive illegal bookmakers out of business or push them to become legitimate taxpaying entities.

These taxes, however, had a mixed impact. The high excise rate and aggressive enforcement did not eradicate illegal gambling. Instead, they contributed to a cat-and-mouse dynamic: legal bookmakers passed the tax burden onto bettors through less-favorable odds, but many bookmakers remained underground, evading detection.[43] Together with the other federal legislation discussed above, this has served to fuel a persistent illegal market.

2. Adjustments to tax rates and enforcement

The federal government has over the years realized that excessively high taxes could inadvertently strengthen the underground economy. Extremely high taxation left no realistic pathway for illegal bookmakers to transition to legally compliant businesses, as it would squeeze their margins excessively. As a result, Congress gradually reduced the wagering excise tax from its original 10% to its current rate of 0.25% for legal wagers, making compliance more palatable for legitimate businesses.[44]

For illegal wagers, however, the tax rate was kept at a punitive 2%—effectively a penalty tax designed to discourage unlicensed activities. This two-tiered system persists, reflecting the government’s attempt to encourage legitimacy while punishing illegality. Nonetheless, the degree to which these tax measures have proven effective has always been tied to how vigorously they have been enforced. In periods when IRS crackdowns were sporadic or resources were limited, the illegal market still found room to maneuver.

3. The rise of online gambling and the offshore question

By the late 1990s and early 2000s, many internet-enabled remote-wagering platforms were located offshore, beyond the immediate reach of U.S. authorities. Illegal online operators leveraged technology and legal grey areas to offer services to U.S. bettors without incurring U.S. taxes or adhering to U.S. regulations. Because federal tax laws were originally designed for land-based bookmakers and did not anticipate the borderless nature of the internet, they proved less than effective against these offshore entities. Such entities could not easily be monitored, and collecting taxes from them proved nearly impossible.[45]

As a result, while the federal wagering excise tax remained on the books, it exerted minimal influence over the burgeoning illegal online gambling market. Operators established themselves in jurisdictions with lenient regulatory and tax regimes, operating without the burden of either U.S. excise taxes or regulatory scrutiny.[46] This tax avoidance made offshore illegal sites more competitive, enabling them to offer better odds or bigger bonuses to attract U.S.-based players.

4. Taxation of winnings and its limited impact on illicit markets

At the federal level, gamblers’ winnings—whether from legal or illegal sources—are considered taxable income.[47] Players are supposed to report such winnings on their federal income tax returns, and certain winnings from legally regulated venues are subject to automatic withholding. Enforcement of this reporting requirement for illegal online gambling is, however, quite limited. Anonymous offshore sites do not issue W-2G forms or other documentation that would prompt accurate reporting. Consequently, players on illegal platforms often pay no tax on their winnings, inadvertently giving illicit sites another competitive edge over lawful, tax-reporting competitors.

C. Conclusion

Since the end of World War II, U.S. federal gambling regulation has shifted from a narrow regime focused primarily on Nevada’s casinos to one putatively responsible for oversight of a legally and technologically complex industry. Key statutes at the federal level—from 1961’s Federal Wire Act to PASPA in 1992 and UIGEA in 2006—have alternately constrained and reshaped the market.

At the state level, legislation authorizing lotteries, casinos, and online betting has been introduced to respond to changing economic and social realities. The introduction of IGRA in 1988 and the relaxation of federal constraints on sports betting after 2018 reflect an evolving consensus that carefully regulated gambling can provide economic benefits and consumer choice.

The proliferation of regulated online gambling at the state level in the 2010s and beyond—enabled by the 2011 DOJ opinion and further boosted by the Supreme Court’s Murphy v. NCAA decision—have fostered the conditions for legitimate online operations to emerge. As states legalized online casinos, poker rooms, and sports betting, licensed operators became subject to state taxation and regulatory oversight, and by extension, to proper federal tax reporting for their U.S.-based activities.

While federal excise taxes continue to apply to illegal bookmakers, in principle, the taxation of regulated online gambling operators is far easier to enforce. Legal sites must comply with both state and federal regulations, issue tax forms to winners, and maintain clear records. The presence of legitimate taxpaying online operators has, however, clearly not displaced the illegal segment entirely. Many consumers still prefer offshore platforms for various reasons, including their anonymity, more favorable odds, avoidance of taxes on winnings, and access to games not permitted in their home states. This market displacement is further compounded by the difficulty consumers experience in distinguishing legal and illegal operators, particularly when the latter use legitimate payment processors and financial services that convey an impression of regulatory compliance.

Federal taxes on gaming revenue—conceived in an era of telephone bookmakers and physical racing tracks, and intended to keep both legal and illegal gambling in check—now arguably serve as the strongest incentives for Americans to continue using illegal offshore gambling sites. Ironically, by diverting tens of billions of dollars of betting activity offshore, the federal wagering tax not only harms legitimate U.S. business, but also significantly reduces revenue both for the federal government, in the form of corporate and personal-income taxes, and state governments, in the form of various taxes and license fees.

II. Harmful Consequences of Illegal Offshore Gambling

While offshore gambling platforms often entice consumers with attractive odds and lavish promotions, they expose users to significant risks that legal, regulated platforms are designed to mitigate. The absence of consumer protections on offshore platforms creates vulnerabilities that can result in severe financial consequences. In addition, when gamblers use offshore sites, businesses and governments in the U.S. lose revenue. This section briefly discusses these issues.

A. Harm to Consumers

One of the most alarming risks arising from U.S. consumers participating in offshore gambling is the lack of legal recourse in the event of disputes. Gambling websites operating from such jurisdictions as Curaçao, Malta, and the Isle of Man are not subject to U.S. laws and regulations. Moreover, it is illegal for U.S. bettors to use such sites from within the United States. Thus, when a U.S.-based bettor experiences issues like incorrect payouts, sudden account closures, or withheld funds, they are likely to find themselves with limited, if any, legal pathways to recover their money. In some cases, offshore operators have closed user accounts arbitrarily and blocked access to funds, leaving bettors with little ability to appeal or reclaim their balances.[48] Consumers may also find that winnings are recalculated or denied outright, with no transparency in the process or accountability from the platform.[49]

The absence of meaningful age-verification requirements on offshore platforms enables access by individuals below legal gambling age, creating a risk of early-onset problem-gambling behaviors that can persist in adulthood. This vulnerability is particularly concerning in light of research demonstrating strong correlations between early gambling exposure and subsequent addiction patterns.[50]

Moreover, these platforms typically lack responsible-gaming safeguards that are standard on regulated sites. Without automated detection of problematic betting patterns, mandatory cooling-off periods, or self-exclusion tools, users who exhibit signs of problem gambling behavior have no access to interventions that could prevent negative outcomes. This absence of protective measures stands in stark contrast to regulated platforms, where sophisticated algorithms and mandatory responsible-gaming programs help to identify and assist at-risk players.

TABLE 1: US Versus Offshore Gambling Websites

Many fly-by-night offshore gambling platforms operate with little regard for business continuity or user security. There have been documented cases of platforms abruptly shutting down, taking all user deposits and winnings with them.[51] While U.S. states and some offshore jurisdictions require operators to segregate operational funds from user deposits, operators in other jurisdictions (such as Curaçao) face no such obligations.[52] As such, users’ funds may be lost if the platform goes bankrupt or engages in fraudulent practices. This is also a risk where operators can simply shut down and reopen under a different name, thereby evading restitution to affected users.

In addition to financial risks, users of offshore platforms may also be vulnerable to data breaches and identity theft. These platforms are not necessarily subject to rigorous cybersecurity standards, leaving sensitive user information—such as payment details and personal identification—exposed to hackers. In contrast, operators based in the United States are required to adhere to strict data-security protocols.[53]

Finally, offshore platforms may engage in predatory practices, such as offering excessively high bonuses with hidden, nearly impossible-to-meet wagering requirements. These practices exploit consumers’ trust and encourage reckless gambling behavior, further exacerbating financial risks.

B. Loss of Revenue to Business and Government

U.S. gaming companies must comply with stringent regulations and taxes, while offshore operators face fewer constraints, allowing them to offer more attractive terms to consumers. The consequent diversion of funds to offshore gambling sites has significant economic implications for U.S. companies, which lose potential customers to offshore sites, limiting their growth and profitability. In addition, uncertainty in the regulatory environment deters investment in the online gambling sector, stifling innovation and job creation.

The AGA estimates that the illegal online gambling market siphons about $4 billion annually from the legal U.S. gaming industry and about $13 billion in tax revenue that would otherwise be paid to the states.[54] This loss affects not only casino operators and sports-betting sites, but also such ancillary industries as software development, payment processing, and marketing.

Illegal offshore gambling also deprives state governments of substantial tax revenues in three ways. First, taxes on gambling revenues, licensing fees, and excise taxes are not collected from offshore operators. Second, reduced business activity leads to lower income-tax collections from employees and corporate taxes from businesses. Third, legal gambling establishments contribute to the economy through construction, hospitality, tourism, and other sectors. By siphoning business, offshore gambling sites reduce this business multiplier.

III. Addressing Illegal Online Gambling Through Enforcement

This section considers the main approaches currently employed by U.S. authorities to limit illegal online gambling.

A. Enforcement of Federal Legislation

As noted, several pieces of federal legislation have been developed specifically to address illegal gambling, but enforcement challenges have hindered their effectiveness.

1. The ‘Black Friday’ crackdown

The most notable enforcement action taken against offshore gambling websites was the “Black Friday” crackdown.[55] On April 15, 2011, the U.S. Justice Department (DOJ) unsealed indictments against the founders of several major online-poker sites, including Isle-of-Man-based PokerStars, Ireland-based Full Tilt Poker, and Costa-Rica-based Absolute Poker. The charges included bank fraud, money laundering, and violations of the UIGEA[56] and the Illegal Gambling Business Act.[57] The DOJ seized domain names and froze bank accounts associated with these sites, effectively shutting down their U.S. operations.[58]

PokerStars eventually reached a settlement with the DOJ, paying substantial fines but without admitting wrongdoing regarding the alleged UIGEA violations.[59] As part of the deal, PokerStars acquired Full Tilt Poker and repaid its customers, whose accounts had been frozen.[60] Absolute Poker and Ultimate Bet effectively ceased operations for U.S. customers and struggled to return player balances.[61]

2. Bodog.com

In 2012, the DOJ indicted the founder of Bodog Entertainment Group (which had employees in Canada and Costa Rica) on charges of illegal gambling and money laundering.[62] The Bodog.com domain was seized, and significant assets were frozen.[63] But this enforcement action illustrated a persistent challenge. Despite the domain seizure, Bodog’s operations effectively continued under the Bovada brand name, maintaining similar infrastructure and customer base but operating through different URLs and corporate entities.[64] The case exemplifies how illegal operators can quickly adapt to enforcement actions by migrating their operations to new domains and corporate structures while retaining their fundamental business model. The ability to rapidly reconstitute operations under new identities significantly undermines the effectiveness of individual enforcement actions.

B. International Cooperation

These traditional enforcement approaches face significant limitations. Given the transnational nature of online gambling, international cooperation is crucial for effective enforcement. The United States has engaged in various initiatives toward that end, including:

• Mutual Legal Assistance Treaties (MLATs): The United States has MLATs with numerous countries, facilitating the exchange of information and assistance in legal proceedings related to criminal matters, including illegal gambling activities.
• Financial Action Task Force (FATF): As a member of the FATF, the United States collaborates with other nations to combat money laundering and terrorist financing, which are often associated with illegal gambling operations.

Ironically, another multilateral treaty to which the United States is a party, the World Trade Organization (WTO) has magnified some of the challenges surrounding U.S. online gambling restrictions. Notably, Antigua and Barbuda filed a complaint alleging U.S. law discriminated against foreign online gambling operators. The WTO ruled in Antigua’s favor, but the United States has yet to fully comply with the ruling, leading to ongoing tensions.[65]

Despite the MLATs, the FATF, and other U.S. efforts to engage in international cooperation, jurisdictional constraints remain a primary challenge, as illegal operators deliberately locate in jurisdictions with weak enforcement regimes.[66] Persuading jurisdictions such as Malta, Curaçao, and the Isle of Man—renowned for their permissive licensing regimes and established roles as global hubs for online gambling—to enforce U.S. gambling restrictions is a challenging proposition. Each of these jurisdictions has built its international reputation, regulatory framework, and economic strategy to attract and sustain online betting operators. Thus, their willingness to curtail operations serving U.S. customers ultimately depends on a mix of legal, economic, diplomatic, and practical considerations.

Even when jurisdiction can be established, sophisticated actors continually develop new methods to evade blocking and monitoring efforts, creating a perpetual technological arms race between regulators and illegal operators.[67] The resource-intensive nature of investigating and prosecuting illegal operators further complicates enforcement efforts.[68]

C. Effectiveness

Enforcement actions like the “Black Friday” crackdown and the takedown of Bodog.com temporarily disrupted the operations of significant offshore gambling sites, reducing their accessibility to U.S. consumers. While these enforcement actions were clearly disruptive and dissuaded some Americans from using offshore poker websites, at least temporarily, they came at significant cost to Americans who were using the affected websites. Those who used Absolute Poker and Ultimate Bet, for example, lost significant sums of money.

Market dynamics pose additional challenges to enforcement-focused approaches. Perhaps most significantly, compliance costs for legitimate operators can create pricing and convenience advantages for illegal alternatives, inadvertently strengthening their competitive positions.[69]

These enforcement challenges have led to several regulatory inefficiencies. The heavy reliance on enforcement diverts public resources from other potential regulatory approaches, often with diminishing returns.[70] Multiple enforcement agencies and jurisdictions frequently struggle to coordinate effectively, while metrics of success tend to focus excessively on bringing enforcement actions, rather than actual market outcomes.

The emphasis on prohibitory measures can also produce several counterproductive effects. Strict regulations may inadvertently segment markets, making illegal alternatives more attractive to certain consumer segments.[71] Compliance requirements can impede legitimate operators from developing new products or services, while driving activity underground may expose consumers to greater risks from unregulated illegal operators. Over time, the limited success of prohibition efforts may gradually erode public and institutional support for enforcement itself.

In the longer term, however, these efforts have had limited effect. In part, this is due to the “Whack-a-Mole” phenomenon; when one site is shut down, others quickly fill the void. New operators emerge, and existing ones adapt by changing their domain names, server locations, or corporate structures. In addition, offshore operators employ sophisticated technologies to evade detection, such as mirror sites, encrypted communications, and anonymous payment methods.

Moreover, enforcement has done little to diminish U.S. consumers’ appetite to participate in illegal offshore online gambling. Technological advancements have significantly lowered the barriers to access offshore gambling sites. Tools such as virtual private networks (VPNs) and proxy domain-name servers allow users to mask their internet-protocol (IP) addresses, making it appear as though they are accessing the internet from a different country. This circumvention of geo-restrictions enables U.S. residents to register and participate on offshore platforms that are officially barred from serving the U.S. market.[72]

In addition, cryptocurrencies have introduced new avenues for pseudonymous transactions, which make it harder to trace funds. These digital currencies are decentralized and operate outside the traditional banking system, impeding authorities’ ability to monitor or block financial transactions related to online gambling.

Finally, differing legal systems and priorities among relevant jurisdictions can hinder effective international enforcement. In spite of MLATs and FATF commitments, some jurisdictions lack the resources and/or willingness to cooperate fully with U.S. authorities.

These limitations suggest the need to complement traditional enforcement with strategies that leverage market forces and address consumer incentives. Such approaches would create conditions where legitimate operators can effectively compete with illegal alternatives, while providing businesses with the tools and frameworks to protect their interests. The optimal regulatory framework would balance enforcement efforts with other approaches based on their relative effectiveness.

IV. Incentive-Compatible Solutions to the Problem of Illegal Offshore Online Gambling

Federal approaches to the regulation of illegal gambling have primarily relied on prohibitory legislation and punitive criminal-enforcement mechanisms—i.e., regulatory and tax “sticks” designed to deter and punish illegal behavior.[73] While stick-based enforcement efforts may have achieved some success in curtailing illegal online gambling, the predominance of these mechanisms reflects an enforcement-first mindset that overlooks opportunities for more efficient and effective solutions. Complementary regulatory approaches are needed that use market-based solutions and adopt incentive-compatible “carrots” to guide consumer behavior toward legitimate, regulated alternatives.[74]

Incentive-compatible regulation aims to align market participants’ interests with policymakers’ goals, thereby creating a framework under which compliance becomes the rational choice, rather than a burden. By leveraging a calibrated combination of rewards (“carrots”) and enforcement measures (“sticks”), these strategies seek to reduce market distortions, encourage lawful behavior, and promote innovation.

This section explores how such frameworks operate across different contexts, emphasizing the importance of balancing incentives to achieve sustainable regulatory outcomes. It begins with some context, describing the general approach of “market-based” regulation. It then delves more specifically into three approaches that offer complementary means of achieving socially desired outcomes: harm reduction, self-help, and private rights of action.

A. Market-Based Regulation

Market-based regulatory strategies can complement enforcement efforts in several crucial ways. First, they acknowledge the reality that consumer choice is heavily influenced by convenience, price, and accessibility, especially in the online world.[75] When regulatory frameworks inadvertently disadvantage legitimate businesses on these dimensions, they may unintentionally drive consumers toward illegal alternatives, regardless of enforcement efforts.[76]

A market-oriented regulatory approach also recognizes the importance of private ordering and self-help mechanisms. Rather than relying solely on government enforcement, this framework empowers legitimate businesses to protect their interests through market mechanisms and technological tools.[77] The success of content-delivery networks in preventing certain forms of piracy, for instance, illustrates how private-sector innovation can complement traditional enforcement approaches.[78]

Critically, this shift toward market-based strategies does not imply abandoning enforcement efforts. Instead, it suggests calibrating regulation to create conditions under which enforcement and market mechanisms work in tandem. This might involve reducing regulatory barriers that disadvantage legitimate operators, while simultaneously providing them with better tools to combat illegal competition. The goal is to create regulatory frameworks that align private incentives with public-policy objectives.

The effectiveness of such “carrot” approaches depends on careful attention to market dynamics and consumer behavior. Regulatory interventions must be designed with a sophisticated understanding of how they will affect competitive conditions in digital markets. This requires moving beyond simple prohibitions to consider how regulatory frameworks influence the relative attractiveness of legal and illegal options. Three “carrot” approaches that might be applied in the context of online gambling are harm reduction, self-help, and new private rights of action.

B. Harm-Reducing Regulatory Carrots

The recent expansion of legal, regulated online gambling in many states is a good example of such a regulatory “carrot.” Pure prohibition does not address the underlying consumer demand that drives illegal markets.[79] By permitting online gambling but subjecting the operators of legally sanctioned websites to various rules, states have been able to ensure legitimate businesses can compete against illegal operators.[80]

Currently, 38 states and the District of Columbia offer regulated sports-betting operations.[81] Of these, 30 states permit online/mobile betting, while seven also permit online/mobile casino gambling.[82] The legal market has shown substantial growth, with the U.S. commercial gaming industry recording $66.6 billion in 2023 revenue and contributing $14.67 billion in direct gaming-tax revenue to state and local governments.[83]

1. Harm reduction as regulatory strategy

Harm reduction is a public-health strategy and philosophical approach aimed at limiting the negative consequences associated with certain behaviors, conditions, or substances, without necessarily requiring their complete cessation. Rather than focusing solely on elimination or abstinence, harm reduction acknowledges that some individuals may continue to engage in potentially risky activities. It therefore seeks to reduce risks and adverse effects—such as disease transmission, injury, or social harm—through practical, evidence-based interventions and policies.[84]

Common examples of harm reduction include cannabis legalization in order to mitigate the harmful effects of underground drug markets; offering designated-driver programs to prevent impaired driving; or implementing safer-gambling tools to limit financial and psychological harm. By meeting people “where they are” and prioritizing their immediate well-being, harm-reduction strategies empower individuals to make informed choices that improve their health and safety, even if their behavior does not fully align with traditional abstinence-based goals.

2. Applying harm reduction to gambling

Applied to gambling, harm-reduction strategies aim to mitigate financial, psychological, and social risks without demanding outright cessation of play. These approaches recognize that some individuals will continue to gamble, and therefore focus on minimizing potential harms. Examples include:

• Deposit and Loss Limits: Allow players to predetermine the amount of money they can deposit or lose within a given period. Once they hit the limit, they cannot continue until the set timeframe is reset.
• Time Limits: Allow players to restrict the length of each gambling session, helping players to maintain greater control and prevent extended, impulsive play.
• Voluntary Exclusion Lists: Players can voluntarily ban themselves from online or land-based gambling venues for a specified period, or indefinitely.
• Cool-Off Periods: Temporary breaks from gambling platforms that grant players the time and distance to reassess their behavior.
• Real-Time Feedback and Prompts: Pop-up messages or periodic notifications that remind players how long they have been playing and how much money they have spent, and providing responsible-gambling information.
• Informed-Choice Tools: Clear disclosure of odds, payout rates, and risk levels helps players to understand the nature of the games and make more informed decisions.
• Analytics-Based Interventions: Operators can use data to identify problematic patterns—such as escalating bets—and prompt players with educational messages, or suggestions to take breaks.
• Player Dashboards: Personal gambling histories, spending summaries, and time-tracking features enable players to monitor and reflect on their habits.
• Content Restrictions: Limiting promotional materials that glorify large wins or target vulnerable populations.
• Incorporating Responsible-Gambling Messages: Ensuring all marketing communications encourage safe play and clearly state the risks involved.
• Onsite and Online Help Links: Quick and prominent links to helplines, self-help tools, and counseling services.
• Collaboration with Treatment Providers: Operators cooperating with health professionals and support groups to offer referrals and interventions for those exhibiting signs of problem gambling.

When such harm-reduction measures are implemented, the gambling environment becomes safer, more transparent, and better equipped to help players maintain control, detect risk behaviors early, and seek help when needed.

3. The economics of harm reduction

From an economic perspective, such harm-reduction strategies offer efficiency advantages over prohibition. Not only do they reduce government expenditure on enforcement (which is now channeled toward ensuring that operators comply with regulations, rather than inefficiently pursuing prosecution of every last illegal bookie) but they can also reduce the social costs associated with problem gambling, while ensuring that consumers are, at minimum, able to avail themselves of common-law protections.

But successful implementation of harm-reduction strategies requires careful attention to market incentives and substitution effects between legal and illegal alternatives. This includes ensuring that regulatory frameworks and tax structures are calibrated to make compliance more attractive than evasion.[85] When regulatory frameworks inadvertently advantage illegal alternatives, they may increase, rather than reduce, aggregate harm.

4. Age-verification and geo-blocking requirements in state gambling legislation

Ancillary to explicit harm-reduction rules, states that have legalized online gambling demand age and location verification. These requirements aim to ensure that only those who are legally permitted to gamble (i.e., adults of at least 21 years of age in most states) and physically located within the state’s borders can place a bet.

Age verification typically requires players to provide such personal details as their name, address, and the last four digits of their Social Security number. Operators use this information to validate the individual’s age against government databases or trusted third-party identity-verification services. In some cases, players may also be asked to submit scans of a driver’s license, passport, or other government-issued identification if the automated checks are inconclusive. Additionally, players must meet multi-factor authentication measures on a regular basis in order to access their accounts.

In many states, players must use approved geolocation plug-ins or mobile apps that run location checks.[86] If the user’s location cannot be verified or is detected outside state lines, access to real-money wagering is denied. These typically utilize multiple data points—such as a device’s GPS data, IP-address location, and nearby Wi-Fi networks—to ensure a high degree of accuracy.

The technological sophistication of age- and location-verification tools help to maintain the integrity of regulated markets. While these measures can sometimes add friction to the user experience, they are generally well-accepted as necessary consumer protections and a way for states to uphold their legal responsibilities. As a result, these rules have become a standard component of the licensing and regulatory requirements for online gambling operators in those U.S. states that have chosen to legalize and regulate the industry.

C. Self-Help

From a law & economics perspective, the concept of self-help refers to actions taken by individuals to enforce their own rights, reclaim property, or resolve disputes without directly involving the state’s formal legal apparatus (courts, police, or regulatory agencies). In essence, self-help is a form of private enforcement or private ordering that circumvents the often lengthy and expensive processes associated with litigation, statutory enforcement, or arbitration.

When individuals believe that the formal legal system is too costly, slow, or uncertain, they may find it more efficient to take matters into their own hands. The immediate costs of self-help—as measured in time, effort, and potential risk—may be lower than the attorney fees, court costs, and prolonged uncertainty associated with the formal legal system. This calculation reflects the basic law & economics principle that rational actors seek to minimize their enforcement and transaction costs. Formal legal remedies often entail substantial transaction costs: filing fees, legal representation, delays due to procedural rules, and the cost of verifying and proving claims in court. If self-help can achieve a similar outcome more quickly and affordably, it may appear economically efficient.

For example, when a limb of a tree growing in Alan’s garden overhangs Beth’s garden, it is technically trespassing, and Beth could take legal action to require Alan to remove it. Alternatively, Beth could avoid the costs of pursuing the formal legal route and ask Alan to cut the limb off. But if Alan refuses to remove the limb or does not respond, or if the limb poses an imminent threat, Beth might simply remove the limb herself. [87]

In theory, such direct and swift self-help is economically desirable if it saves resources and reduces uncertainty. But while self-help may appear efficient from a particular individual’s perspective, it can also produce negative externalities—i.e., costs imposed on third parties or on society at-large. Self-help can, for example, lead to violence, retaliation, or other forms of disorder that undermine overall social welfare. These negative spillover effects are a key reason why most legal systems regulate or limit self-help rights. Without legal constraints, private enforcement risks devolving into cycles of revenge or arms races in security measures, raising social costs substantially.

From a law & economics perspective, the optimal legal regime finds a balance: allowing some forms of self-help where it efficiently remedies minor issues (e.g., repossession of collateral under certain conditions), but prohibiting it where it might cause disproportionate harm or risk (e.g., the use of baseball bats to enforce debt collection). Legal frameworks may thus grant limited self-help rights—like the right to retake wrongfully held chattel or to delimb an overhanging tree without going to court—while imposing rules that minimize violence or wrongful deprivation.

In the context of illegal online gambling, self-help would likely come primarily in the form of public-information campaigns. Thus, operators of legal online gambling websites and apps might communicate the dangers of illegal operators, emphasizing the risk that those operators fail to mitigate. Part of this process might include, for example, purchasing domain names similar to those of the illegal operators, and redirecting the URL to a webpage highlighting these dangers and providing links to one or more legitimate operators.

D. Site Blocking

If the legal system reliably enforces rights at relatively low cost, individuals will be less tempted to engage in self-help. Well-defined property rights, contract-enforcement mechanisms, and efficient dispute-resolution institutions enable private parties to resolve conflicts, reducing the need for either regulatory intervention or self-help.[88] In other words, the presence of a competent and accessible formal legal system can be seen as a public good that deters suboptimal actions and prevents wasteful conflicts.

One way the legal system could facilitate more effective protection of legal online gambling in the United States would be to provide those legal operators with a private right of action to require internet service providers (ISPs) to block access to illegal operators, or to require or encourage other intermediaries to prevent access to specific web domains. Indeed, this strategy (“site blocking”) has been considered and, in some cases, implemented to curb illegal online gambling. By making it harder for users to reach unlicensed or unauthorized gambling sites, governments and regulatory bodies can steer bettors toward legal, regulated platforms or deter them from wagering altogether. Mechanisms for site blocking include:

1. Domain Name System (DNS) Filtering: ISPs are instructed to filter out or redirect traffic from certain domain names. When users attempt to access these domains, they are either blocked outright or redirected to a warning page.
2. IP Address Blocking: Similar to DNS filtering, but more direct. ISPs block traffic to specific IP addresses known to host illegal gambling services.

Site blocking makes it more difficult for customers to access illegal gambling sites, making those sites less attractive and harder to find. As a result, players are encouraged to use regulated, taxed, and monitored platforms that protect consumers and support public revenue. Since legal sites in U.S. states generally have stronger age-verification and responsible gambling tools, blocking unregulated sites can help to prevent vulnerable populations from accessing unsafe environments.

There are, however, numerous technological workarounds to evade site-blocking restrictions. Motivated users can often circumvent site blocking through VPNs, mirror sites, or the use of alternative DNS services. This undermines the effectiveness of blocking strategies.

In addition, as noted, many illegal gambling sites operate from jurisdictions that have not, historically, been terribly cooperative with U.S. authorities. Site blocking, therefore, becomes yet a Whack-a-Mole game, with sites frequently changing their domain names and IP addresses.

Mandating that ISPs block sites in response to demands from private actors also raises questions about free speech and the respective roles of government and private actors in regulating the internet. These are not trivial matters, as they may inadvertently affect legitimate activities, leading to overblocking and potential legal challenges. In addition, implementing and maintaining site-blocking infrastructure can be resource-intensive.

Notwithstanding these concerns, several countries have experimented with site blocking as part of broader efforts to control illegal gambling. For instance, Italy, France, and Denmark have used site blocking in conjunction with licensing regimes. While results have been mixed, some jurisdictions that have employed site blocking have seen reductions in the visibility and market share of illegal operators.

If implemented cautiously, site blocking may serve as a partial deterrent to illegal online gambling by making it less convenient to access unregulated platforms. It is not, however, a silver bullet. In practice, site blocking’s effectiveness is likely to depend on the overall regulatory ecosystem. It should be seen, at best, as a complement to consumer education, international cooperation, and the creation of attractive legal gambling options.

E. Conclusion

In digital markets, where rapid technological change and information asymmetries often make public enforcement costly or impractical, self-help and private enforcement through new rights of action, such as site blocking, can be more efficient and effective than government intervention. This is in no small part because legitimate businesses typically have significant informational and technological advantages over regulators in identifying and responding to illegal competition. As such, regulatory frameworks should seek to facilitate private ordering, rather than relying primarily on public enforcement.[89] This approach, however, requires careful attention to potential externalities and the risk that private enforcement might exceed socially optimal levels.

The self-help framework thus suggests that optimal digital regulation should focus not just on direct enforcement, but on creating conditions for legitimate market participants to effectively protect their interests while serving broader regulatory goals. This insight provides theoretical support for examining how current regulatory frameworks might be refined to better leverage private ordering to address illegal online activities.

V. The Perverse Effects of Federal Excise Taxes

As noted above, the federal excise tax on gambling, introduced in 1951, was originally designed to suppress illegal bookmaking operations by imposing financial burdens on those engaging in sports betting.[90] At the time, the gambling industry operated almost entirely outside legal frameworks, making enforcement difficult and the tax a tool for deterrence. But with sports betting now legal in most U.S. states, it is far from clear that the tax serves any useful purpose; indeed, as discussed below, it is now likely counterproductive.

A. Structure of the Tax

The federal tax now comprises two key components: a 0.25% tax on all legal wagers (known as the “handle tax”) and a $50 annual head tax per employee involved in accepting wagers.[91] While these rates might appear modest at first glance (certainly compared to the original, intentionally punitive 10% tax), their structural design and cumulative impact create significant competitive disadvantages for legal operators.

The handle tax’s design is particularly problematic in that it applies to the total amount wagered, rather than operator revenue. This means operators pay taxes on their entire betting volume regardless of whether they ultimately profit from those wagers. Further, when combined with state-specific taxes, legal operators face a large overall tax burden that offshore competitors simply circumvent. The impact of this tax structure manifests directly in market pricing, creating measurable competitive disadvantages for legal operators.

For example, to cover these tax obligations and compliance costs, legal sportsbooks typically must charge a higher house take than their offshore competitors. A typical spread bet at a legal sportsbook requires bettors to wager $110 to win $100, while offshore operators can offer more favorable odds, requiring only $105 to win $100.[92] This difference, while seemingly small per individual bet, compounds significantly for frequent bettors and creates a powerful incentive to seek illegal alternatives.

The $50 annual head tax per employee, though also seemingly nominal, can further distort the market by discouraging job creation and pushing operators toward automation, rather than hiring additional staff for customer service and compliance functions.

What was once a tool to combat illegal gambling now inadvertently undermines the very legal market it seeks to protect. By failing to adjust the tax structure to reflect modern regulatory realities, the federal excise tax creates a paradoxical outcome: it weakens the competitiveness of legal operators while bolstering the appeal of unregulated alternatives.

B. Competitive Disadvantages for Legal Operators

As noted, one of the clearest ways that offshore gambling platforms outcompete their legal counterparts is through pricing. Although a difference of, say, $5 may seem trivial on a single wager, it accumulates substantially for frequent bettors, making offshore platforms far more appealing to price-sensitive consumers. Additionally, the pricing gap compounds the competitive disadvantage when combined with other operational disparities. Offshore platforms, for example, routinely offer larger bonuses and promotions—e.g., 100% deposit matches of up to $1,000, compared to the more modest 50% matches with stringent wagering requirements typical of legal sportsbooks.[93] These incentives, coupled with better odds, make offshore platforms particularly attractive, even as they expose users to significant risks, such as a lack of consumer protections or legal recourse.

The compounding effect of these various tax burdens creates another paradox: measures intended to generate public revenue may actually reduce total tax receipts by driving activity toward untaxed illegal markets. This dynamic is exacerbated by the digital nature of these markets, where consumers can easily compare odds and switch between legal and illegal platforms. When regulatory costs force legal operators to offer consistently worse value propositions than their illegal competitors, even consumers who would prefer to use regulated platforms may find the price differential too significant to ignore.

The pricing gap is not merely a reflection of business efficiency, but a structural disadvantage created by outdated regulatory frameworks. While legal operators invest heavily in compliance measures, responsible-gaming programs, and state-mandated reporting, offshore platforms avoid these costs entirely. This disparity enables illegal operators to channel their cost savings directly into consumer-attractive pricing and promotions, drawing bettors away from the regulated market.

This dynamic highlights the paradox of current U.S. gambling regulations: policies designed to promote fairness and consumer protection can inadvertently push consumers toward unregulated alternatives that lack these safeguards. Addressing these competitive disadvantages through measures such as tax reform and enhanced enforcement tools would represent a critical step toward restoring the integrity and appeal of the legal gambling market.

IV. Conclusion and Recommendations

The online gambling market illustrates how outdated tax and regulatory frameworks can inadvertently strengthen the illegal markets they were designed to combat. Our analysis suggests the need for a two-pronged approach that combines tax reform with enhanced enforcement tools to create conditions under which legitimate operators can compete effectively, while maintaining robust consumer protections.

The single change likely to generate the greatest benefit would be to repeal federal excise taxes on gambling. Several pieces of legislation proposed in the 118^th Congress would do just that. For example, the Withdrawing Arduous Gaming Excise Rates (WAGER) Act would eliminate the federal handle tax.[94] Meanwhile, the Discriminatory Gaming Tax Repeal Act would repeal the excise tax on sports wagering.[95] These reforms are aimed directly at addressing the competitive disadvantages that legal operators face, while aligning with broader harm-reduction principles.

If excise-tax repeal of is not possible, Congress should consider approaches like those in the UK and Denmark that assess tax on gross gaming revenue (GGR)—that is, a tax on the profit a bookmaker takes, rather than on the entire handle.[96] Admittedly, this approach is imperfect, and both jurisdictions have apparently steep tax rates (with more increases promised in the future).[97] Nonetheless, a GGR-based approach would better align operator incentives with public-policy goals by taxing actual gambling profits, rather than total betting volume.

Tax reform alone would, however, be insufficient. As discussed in earlier sections, self-help actions such as educating gamblers about the dangers of using offshore websites, as well as the introduction of private rights of action such as site blocking, represent crucial complementary tools to channel consumers toward legitimate services. Just as site blocking has helped to combat online piracy, it can effectively restrict access to offshore gambling platforms. Moreover, both self-help and private rights of action are likely to be more effective when combined with policy reforms that enable legitimate operators to offer competitive products.

[1] See Sizing The Illegal And Unregulated Gaming Markets In The United States, Am. Gaming Ass’n (Nov. 2022), at 3, available at https://www.americangaming.org/wp-content/uploads/2022/11/Sizing-the-Illegal-and-Unregulated-Gaming-Markets-in-the-US.pdf (because this figure includes bookmakers, the total attributable to offshore websites may be slightly lower; in addition, the AGA estimates that roughly $110 billion is wagered using “unregulated machines” in bars, taverns, and other venues).

[2] See James Bisson, One-Third of Sports Bettors in Legal States Still Use Offshore Sportsbooks, Covers (Aug. 12, 2024), https://www.covers.com/politics/covers-betting-habits-survey.

[3] See Yield Sec Report: Illegal US Gross Gaming Revenue Continues to Significantly Outpace Legal GGR, iGB Ed. Team (Aug. 27, 2024), https://igamingbusiness.com/gaming/yield-sec-sports-betting-illegal-market.

[4] George G. Fenich, A Chronology of Gaming in the U.S., 3 (2) Gaming Rsch. & Rev. J. 65, 66 (1996), https://digitalscholarship.unlv.edu/cgi/viewcontent.cgi?article=1223&context=grrj.

[5] Jonathan D. Cohen, How Lottery Money Helped Build the United States: The Secret History of American Lotteries, Vox (Oct. 24, 2018), https://www.vox.com/first-person/2018/10/24/18018720/mega-millions-lottery-power-ball-drawing.

[6] Fenich, supra note 4 at 66.

[7] Cohen, supra note 5.

[8] G. Robert Blakey & Harold A. Kurland, The Development of the Federal Law of Gambling, 63 (6) Cornell L. Rev. 923, 1021 (1978), https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=4158&context=clr.

[9] Id. at 931.

[10] Id. at 939.

[11] David G. Schwartz, Cutting the Wire: Gaming Prohibition and the Internet (U. Nev. Press, 2005), at 24.

[12] See Matthew Vaz, Gambling in the Northern City: 1800 to 2000, Oxf. Res. Encycl. Am. Hist. (Nov. 20, 2018), https://doi.org/10.1093/acrefore/9780199329175.013.560.

[13] Id.

[14] Schwartz, supra note 11, at 33-34.

[15] Vaz, supra note 12.

[16] See Steven Riess, Horse Racing the Chicago Way: Gambling, Politics, and Organized Crime, 1837-1911 (Syracuse U. Press, 2022).

[17] Arne K. Lang, Sports Betting and Bookmaking: An American History (Rowman Littlef. Publ., 2016).

[18] See History of Monmouth Park, Monmouth Park, https://www.monmouthpark.com/about (last visited Dec. 16, 2024), (for example, the New Jersey Legislature banned both horse racing and parimutuel betting in 1894); New Jersey Sports Betting, Knup Sports, https://knupsports.com/sports-betting/usa/new-jersey (last visited Dec. 16, 2024), (in an 1897 referendum, voters approved a proposal to ban all gambling in the state; New York State followed suit, banning betting with the Hart-Agnew Law of 1908).

[19] Oral Betting Upheld by Appellate Court, N.Y. Times (Nov. 21, 1908), at 12, https://timesmachine.nytimes.com/timesmachine/1908/11/21/104813454.html?pageNumber=12.

[20] Legalized Gambling in Nevada: Its History, Economics and Control, Nev. Gaming Comm’r & St. Gaming Control Bd. (1963), at 7.

[21] Jennifer Roberts et al., Practical Perspectives on Gambling Regulatory Processes for Study by Japan: Eliminating Organized Crime in Nevada Casinos, U. Nev. Las Vegas Int’l Gaming Inst. (Aug. 25, 2017), available at https://www.unlv.edu/sites/default/files/page_files/27/JapanEliminatingOrganizedCrime.pdf.

[22] See Kevin Flynn, How NH Defied the Feds, Mob and Church to Create the First State Lottery, N.H. Mag. (Dec. 14, 2015), https://www.nhmagazine.com/how-nh-defied-the-feds-mob-and-church-to-create-the-first-state-lottery; see also Chapter 2: Gambling in the United States, Nat’l Gambling Impact Study Comm’n Rep., available at https://govinfo.library.unt.edu/ngisc/reports/2.pdf (last visited Dec. 14, 2024).

[23] Casino Gaming in New Jersey, St. of N.J. Casino Control Comm’n, https://www.nj.gov/casinos/law/gamingnj (last visited Dec. 14, 2024); see also Julie Hunsaker, The Impact of Riverboat Casinos on the Demand for Gambling at Casino Resorts: A Theoretical and Empirical Investigation, 22 Managerial & Dec. Econ. 98 (2001), (by the mid-1990s, these riverboat casinos were netting about the same GGR as Las Vegas and Atlantic City combined).

[24] California v. Cabazon Band of Mission Indians, 480 U.S. 202 (1987).

[25] 25 U.S.C. § 2701 et seq. (1988).

[26] See American Indian Communities in Minnesota Gaming, Minn. St. S. Couns. & Rsch., https://www.senate.mn/departments/scr/report/bands/gaming.htm (last visited Dec. 15, 2024).

[27] James Schaap & Angel Gonzalez, The Growth of the Native American Gaming Industry: An Update, 16 (1) S.U. Coll. Bus. E-J. (2021), https://digitalcommons.subr.edu/cbej/vol16/iss1/1.

[28] 18 U.S.C. §§ 1081, 1084 (2012); see also Schwartz, supra note 11, 80-113.

[29] 18 U.S.C. §§ 1961-1968 (2018).

[30] See Schwartz, supra note 11, at 169-170.

[31] Id. at 176-197.

[32] 28 U.S.C. §§ 3701-3704 (2012).

[33] Id.

[34] 138 S. Ct. 1461 (2018)

[35] US Legal Sports Betting by State: 2024, Gambling Indus. News, https://gamblingindustrynews.com/usa-legal-sportsbetting (last visited Dec. 15, 2024).

[36] The Rise of Sports Betting: Market Trends and Business Opportunities, Bus. Matters (Nov. 4, 2024), https://bmmagazine.co.uk/business/the-rise-of-sports-betting-market-trends-and-business-opportunities.

[37] See Benjamin C. Wickert, All In, But Left Out: How the Unlawful Internet Gambling Enforcement Act Seeks to Eradicate Online Gambling in the United States, 10 (1) Vand. J. Ent. & Tech. L. 215, 221-22 (2017), https://scholarship.law.vanderbilt.edu/cgi/viewcontent.cgi?article=1349&context=jetlaw.

[38] See New AGA Report Shows Americans Gamble More Than Half a Trillion Dollars Illegally Each Year, Am. Gaming Ass’n (Nov. 30, 2022), https://www.americangaming.org/new/new-aga-report-shows-americans-gamble-more-than-half-a-trillion-dollars-illegally-each-year.

[39] See Virginia A. Seitz, Whether Proposals by Illinois and New York to Use the Internet and Out-Of-State Transaction Processors to Sell Lottery Tickets to In-State Adults Violate the Wire Act, Dep’t. Just. Off. Legal. Couns. (Sep. 20, 2011), available at www.justice.gov/sites/default/files/olc/opinions/2011/09/31/state-lotteries-opinion.pdf.

[40] See notes 41-47 and accompanying text.

[41]  John E. Coons, The Federal Gambling Tax and the Constitution, 43 (5) J. Crim. L. Criminology & Police Sci. 637, 637 (1953), https://www.jstor.org/stable/1139648?origin=crossref.

[42] Id.

[43]  See Wayne Taylor et al., Online Gambling Policy Effects on Tax Revenue and Irresponsible Gambling (SMU Cox Sch. of Bus. Rsch. Paper No. 24-7, Jun. 2024), at 3 & n.2, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4856684.

[44] See Press Release, Cortez Masto, Hyde Smith Introduce Bipartisan Bill to Boost Local Sports Tourism and Gaming Economy, Sen. Catherine Cortez Masto (Jun. 31, 2024), https://www.cortezmasto.senate.gov/news/press-releases/cortez-masto-hyde-smith-introduce-bipartisan-bill-to-boost-local-sports-tourism-and-gaming-economy/#:~:text=Established%20in%201951%20to%20suppress,for%20legal%20sports%20betting%20businesses.

[45] Amanda v. McCormick & Irwin M. Cohen, A Review of Online Gambling Literature 2007 (Univ. Fraser Val., 2007), at 19-20, available at https://cjr.ufv.ca/wp-content/uploads/2017/01/Review-of-Online-Gambling-Literature.pdf.

[46] Joel Weinberg, Everyone’s A Winner: Regulating, Not Prohibiting, Internet Gambling, 35 Sw. U. L. Rev. 293, 295 (2006), https://heinonline.org/HOL/LandingPage?handle=hein.journals/swulr35&div=19&id=&page=.

[47] 26 U.S.C.A. § 61 (2017), (the federal tax code requires payment of taxes on “all income from whatever source derived”).

[48] See Mike Lukas, AGA Calls on US Attorney General to Prosecute Illegal Offshore Sportsbooks, WSN (Oct. 14, 2022), https://www.wsn.com/betting/aga-prosecute-illegal-offshore-sportsbooks; Katarina Vojvodic, Illegal Offshore Online Gambling Targeted by Seven State Regulators, PlayUSA (Jan. 8, 2024), https://www.playusa.com/seven-states-ask-doj-fight-illegal-online-gambling.

[49] See Rob Davies, Revealed: How Bookies Clamp Down on Successful Gamblers and Exploit the Rest, The Guardian (Feb. 19, 2022), https://www.theguardian.com/society/2022/feb/19/stake-factoring-how-bookies-clamp-down-on-successful-gamblers; Josh Schwartz, Blacklisted and Offshore Casinos: Avoid to Play Here!, Captain Gambling (Dec. 12, 2024), https://www.captaingambling.com/blacklisted-casino; Jonathan, Dangers of Offshore Sportsbooks: States Cracking Down, Birches Health (Jun. 8, 2024), https://bircheshealth.com/resources/offshore-sportsbooks.

[50] See, e.g., Rachel A. Volberg et al., An International Perspective on Youth Gambling Prevalence Studies, 22(l) Int. J. Adolescent Med. Health 38 (2010).

[51] See Chav Vasilev, Cryptocasino BC.Game Appears on the Verge of Going Out of Business, Bonus.com (Nov. 28, 2024), https://www.bonus.com/news/cryptocasino-bc-game-appears-on-the-verge-of-going-out-of-business; Jill R. Dorson, Offshore Sportsbook 5Dimes Is Shutting Down to U.S. Customers, Eyeing Rebirth in States, Handle (Sep. 7, 2020), https://sportshandle.com/5dimes-sportsbook-offshore-legal.

[52] Vasilev, id.

[53] See Kathryn R. L. Rand & Steven Andrew Light, Sports Betting and Data Security: Cybersecurity, Data Protection, and Privacy Rights in Gaming Law Practice, ABA Bus. L. Today (Feb. 10, 2021), https://www.americanbar.org/groups/business_law/resources/business-law-today/2021-february/sports-betting-and-data-security.

 

[54] See Am. Gaming Ass’n, supra note 38.

[55] United States v. Scheinberg et al., No. 1:10-cr-00336 (S.D.N.Y. Apr. 11, 2011), available at https://www.justice.gov/archive/usao/nys/pressreleases/April11/scheinbergetalindictmentpr.pdf; Jon Sofen, Full Tilt Poker Scandal in 2011: The Darkest Days in Poker History, PokerNews (Dec. 6, 2022), https://www.pokernews.com/news/2022/11/full-tilt-poker-cheating-scandal-42534.htm.

[56] The Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006 prohibits financial institutions from processing transactions related to online gambling services not authorized under federal or state law (31 U.S.C. §§ 5361–5367). While the UIGEA does not criminalize the act of placing bets online, by prohibiting banks and payment processors from facilitating payments to unlicensed gambling websites, the act aims to choke off the financial lifeline of offshore operators.

[57] The Illegal Gambling Business Act (IGBA) of 1970 makes it a federal crime to operate an illegal gambling business that violates state laws (18 U.S.C. § 1955). This act provides federal authorities with jurisdiction to prosecute illegal gambling operations that have a substantial impact on interstate commerce.

[58] See Sofen, supra note 55.

[59] See Tiffany Hsu, PokerStars Settles for $731 Million, Buys Full Tilt, Pays Players, L.A. Times (Jul. 31, 2012), https://www.latimes.com/business/la-fi-mo-pokerstars-full-tilt-20120731-story.html; United States v. Pokerstars et al., No. 11-cv-2564 (S.D.N.Y. Mar. 16, 2016), ECF No. 304, https://docs.justia.com/cases/federal/district-courts/new-york/nysdce/1:2011cv02564/377900/304; United States v. Pokerstars et al., No. 11-cv-2564 (S.D.N.Y. July 14, 2014), EFC No. 241 (Motion to Dismiss), https://docs.justia.com/cases/federal/district-courts/new-york/nysdce/1:2011cv02564/377900/241; Press Release, Manhattan U.S. Attorney Announces $731 Million Settlement of Money Laundering and Forfeiture Complaint with PokerStars and Full Tilt Poker, Fed. Bur. Investig. (Jul. 31, 2012), https://archives.fbi.gov/archives/newyork/press-releases/2012/manhattan-u.s.-attorney-announces-731-million-settlement-of-money-laundering-and-forfeiture-complaint-with-pokerstars-and-full-tilt-poker.

[60] Id.

[61] Sofen, supra note 55.

[62] See Press Release, Bodog and Four Canadian Individuals Indicted for Conducting Internet Gambling Business Generating Over $100 Million in Sports Gambling Winnings, Dep. Justice (Feb. 28, 2012), https://www.justice.gov/archive/usao/md/news/2012/BodogandFourCanadiansIndictedforConductingInternetGamblingBusinessGeneratingover100Million.html.

[63] Id.

[64] Bodog Is Now Bovada in the US, Sports Gambl. Websites (2018), https://www.sportsgamblingwebsites.com/bodog-is-now-bovada-in-the-us.

[65] Jonathan Lynn, Antigua Wins Modest Sanctions in U.S. Gambling Case, Reuters (Dec. 21, 2007), https://www.reuters.com/article/technology/antigua-wins-modest-sanctions-in-us-gambling-case-idUSL21601574.

[66] Tomer Broude & Doron Teichman, Outsourcing and Insourcing Crime: The Political Economy of Globalized Criminal Activity, 62 Vand. L. Rev. 795, 818 (2009); Jack L. Goldsmith, Against Cyberanarchy, 65 U. Chi. L. Rev. 1199, 1222 (1998).

[67] See Derek E. Bambauer, Ghost in the Network, 162 (5) U. Pa. L. Rev. 1011 (2014), https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=9439&context=penn_law_review.

[68] See Pierre-Hugues Verdier, Transnational Enforcement Leadership and the World Police Paradox, 64 Va. J. Int’l L. 239, 264–66 (2024), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4755507; Anupam Chander, The Electronic Silk Road, How the Web Binds the World in Commerce (Yale Univ. Press, 2013), https://scholarship.law.georgetown.edu/facpub/2297.

[69] See Richard A. Posner & William M. Landes, Market Power in Antitrust Cases, 94 (5), Harv. L. Rev., 937 (1980), https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=2551&context=journal_articles.

[70] See Gary S. Becker, Crime and Punishment: An Economic Approach, 76 (2) J. Pol. Econ. 169 (1968), https://www.jstor.org/stable/1830482.

[71] See, e.g., infra notes 90-93 and accompanying text (discussing how U.S. tax policy inadvertently makes illegal offshore betting a more viable industry).

[72] What Is Geo-Blocking and How to Bypass It Successfully?, 01net, https://www.01net.com/en/vpn/geo-blocking (last visited Dec. 14, 2024).

[73] Pierre-Hugues, supra note 68, at 239, 257.

[74] Id. at 267.

[75] See Hal R. Varian, Computer Mediated Transactions, 100 (2) Am. Econ. Rev. 1 (2010), available at https://people.ischool.berkeley.edu/~hal/Papers/2010/cmt.pdf (noting how the “bits” that string together to form the internet constitute solutions to emergent demand based on user and consumer preferences).

[76] See Friedrich Schneider, Shadow Economics and Corruption all Over the World: What do we Really Know? (IZA Discussion Paper No. 2315, 2006), available at https://docs.iza.org/dp2315.pdf.

[77] See Robert P. Merges, Compulsory Licensing vs. the Three “Golden Oldies” Property Rights, Contracts, and Markets, Policy Anal. (Jan. 15, 2004), available at https://www.cato.org/sites/cato.org/files/pubs/pdf/pa508.pdf (discussing the development of market solutions and collective-rights organizations as obviating the need for such crude legislative approaches to content distribution as compulsory licenses).

[78] See Chris Cooke, Cloudflare Must Block Piracy Site, German Court Confirms, Complete Music Update (Nov. 29, 2023), https://completemusicupdate.com/cloudflare-must-block-piracy-site-german-court-confirms; Leveraging CDNs to Combat Content Piracy in Music Streaming, Cachefly (Mar. 7, 2024), https://www.cachefly.com/news/leveraging-cdns-to-combat-content-piracy-in-music-streaming.

[79] Julie E. Cohen, Between Truth and Power: The Legal Constructions of Informational Capitalism (Oxford U. Press, 2019), https://academic.oup.com/book/37371.

[80] See David J. Teece, Profiting from Innovation in the Digital Economy: Standards, Complementary Assets, and Business Models in the Wireless World, 47 (8) Res. Pol’y 1367 (2018), https://www.sciencedirect.com/science/article/abs/pii/S0048733318300763 (Teece describes the complex business environments needed to ensure innovative businesses can thrive, highlighting the need for law and regulation to take seriously the idea that modern dynamic firms are not mere “widget” sellers but are part of highly complicated industries with dynamic cost structures; even apparently marginal changes in a legal environment can have large effects on legitimate operators).

[81] See Interactive U.S. Map: Sports Betting, Am. Gaming Ass’n, https://www.americangaming.org/research/state-gaming-map/ (last visited Dec. 14, 2024).

[82] See Ian Macintyre, States Where Online Gambling Is Legal in the USA, Altenar (Apr. 9, 2024), https://altenar.com/blog/states-where-online-gambling-is-legal-in-the-usa.

[83] See Press Release, AGA Statement on New Legislation to Repeal the Federal Sports Betting Excise Tax on Legal Operations, Am. Gaming Ass’n (Jul. 31, 2024), https://www.americangaming.org/new/aga-statement-on-new-legislation-to-repeal-the-federal-sports-betting-excise-tax-on-legal-operators.

[84] See Cass R Sunstein, The Limits of Quantification, (Harv. Pub. L. Working Paper No. 14-13, 2014), at 1, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2424878 (in regulatory theory, this approach aligns with literature on the “good enough,” which recognizes that pursuing theoretical optima may prove less effective than pragmatic interventions that account for real-world constraints; noting that, in imperfect-information environments, regulatory activity can nonetheless approximate good decisions); H.L.A. Hart, The Concept of Law (3d ed., Oxford U. Press, 2012), https://www.jstor.org/stable/2183110 (discussing how rule-based systems inevitably gravitate toward practical functional states, rather than theoretical purity).

[85] See Ian Ayres, & John Braithwaite, Responsive Regulation, Transcending the Deregulation Debate (Oxford U. Press, 1992), at 51-53, available at https://johnbraithwaite.com/wp-content/uploads/2016/06/Responsive-Regulation-Transce.pdf.

[86] See Beyond Compliance: Reaping the Benefits of Geolocation Services, iGB Ed. Team (Dec. 3, 2024), https://igamingbusiness.com/gaming/beyond-compliance-reaping-the-benefits-of-geolocation-services-radar/#:~:text=In%20some%20cases%2C%20an%20operator,use%20a%20respective%20gambling%20app.

[87] In Lemmon v. Webb [1894] 3 Ch. 1, the English Court of Appeal clarified the principles governing the self-help remedy available to a property owner when a neighbor’s trees intrude onto their land. Specifically, the court recognized that a landowner has the right to cut back branches (or roots) of a neighbor’s tree that extend onto their property, so long as the trimming is done up to, but not beyond, the boundary line. The right to self-help was not contingent on giving prior notice to the tree’s owner, although doing so might be prudent. The landowner performing the trimming must ensure that no unnecessary damage is inflicted on the neighbor’s property, and the severed branches or roots should be offered back to the neighbor if they hold value.

[88] Guido Calabresi & A. Douglas Melamed, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 (6) Harv. L. Rev. 1089, (1972), available at https://www.amherst.edu/media/view/123372/original/CalabresiMelamed.PDF (Calabresi & Melamed note that legal systems often choose between protecting entitlements through public or private enforcement based on transaction costs and institutional competence).

[89] See R.H. Coase, The Problem of Social Cost, 3 J.L. & Econ. 1 (1960), available at https://www.law.uchicago.edu/sites/default/files/file/coase-problem.pdf (Coase observed that private ordering often allows for externalities to be effectively handled by market processes and contracting); Henry G. Manne, Insider Trading and the Stockmarket, 57 (4) Duke L.J. 456 (1969), https://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=2096&context=dlj; Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action (Cambridge Univ. Press, 1990).

[90] See The Federal Gambling Tax and the Constitution, 43 (5) J. Crim. L. Criminology & Police Sci. 637 (1953), https://scholarlycommons.law.northwestern.edu/cgi/viewcontent.cgi?article=4067&context=jclc.

[91] See Sports Wagering, Inter. Revenue Serv., https://www.irs.gov/businesses/small-businesses-self-employed/sports-wagering (last visited Dec. 16, 2024); id.

[92] Damjan Jugovic Spajic, What Is a Sportsbook? The Basics Explained, PlayToday (Feb. 28, 2024), https://playtoday.co/blog/guides/what-is-a-sportsbook; Cole Rush & Brian Pempus, What Is the Vig in Betting?, Forbes Betting (Nov. 5, 2024), https://www.forbes.com/betting/guide/vig (noting that “discount” sportsbooks require a lower wager to win an equivalent payout as legitimate sportsbooks).

[93] See Offshore Sportsbook Authority Since 1999, BMR Bookmakers Rev., https://www.bookmakersreview.com (last visited Dec. 17, 2024), (comparing the various incentives offered by online sportsbooks).

[94] S. 4872, 118^th Cong. (2024), available at https://www.congress.gov/118/bills/s4872/BILLS-118s4872is.pdf.

[95] Discriminatory Gaming Tax Repeal Act, H.R. 1661, 118^th Cong. (2023), https://www.congress.gov/bill/118th-congress/house-bill/1661.

[96] See Robert Fletcher, Operator Share Price Tumble as UK Government Considering Gambling Tax Increase, iGB (Oct. 14, 2024), https://igamingbusiness.com/legal-compliance/britain-gambling-tax-increase; Rocco Porreca et al., Sports Gambling in Select Nations, Aspen Inst., https://www.researchgate.net/publication/329246249_Sports_Gambling_in_Select_Nations (last visited Dec. 16, 2024); Nina Henningsen, Gaming Law 2024, Denmark, Chambers and Partners, https://practiceguides.chambers.com/practice-guides/gaming-law-2024/denmark/trends-and-developments (last visited Dec. 20, 2024).

[97] See Fletcher, supra note 96 (the UK is currently at 21%, with rumors that an increase may be in the offing); Denmark Online Gambling Market-Impact Analysis, Indep. Rep. (2020), available at https://www.egba.eu/uploads/2020/06/Tax-analysis-Denmark.pdf (Denmark’s tax rate is 28%).