The Campaign for Fairer Gambling (CFG) has released a new report in collaboration with market intelligence platform Yield Sec. The report reveals a rise in consumer losses in states that legalize online gambling without adequately tackling the unlicensed market.
Campaign for Fairer Gambling Shares Concerning Findings
The report suggests consumer harm grows significantly in states where online gambling is partially or fully legalized, especially when there is little enforcement against unlicensed operators. CFG classifies US states into three categories: states without legal online gambling (e.g., California and Texas), states allowing only online sports betting (e.g., New York and Florida), and states permitting both online sports betting and online casino games (e.g., Michigan and New Jersey). The report evaluates gambling losses by comparing gross gaming revenue (GGR) per capita to average income in 2024.
Nationally, the average GGR from both licensed and unlicensed online gambling is 0.62% of income per capita. By contrast, states without any legal online gambling report lower losses, averaging just 0.31% of income. However, states with only legal online sports betting show a GGR per capita increase to 0.77% of average income, and in states with both online sports betting and online casino gambling, it rises to 1.12% of income per capita, about 3.6 times more than in states without legal online gambling.
74% of Online GGR in the US Flows to Unlicensed Operators
The report highlights the weaknesses in the current regulatory framework, noting unlicensed operators offer better deals like bigger bonuses and fewer restrictions due to avoiding compliance costs such as taxes and licensing fees. The lack of stringent monitoring and enforcement allows these operators to flourish, competing with licensed providers and undermining the regulated gambling system’s integrity.
CFG argues that without strong measures to manage and restrict unlicensed gambling, the legal industry cannot compete well. Thus, legalized gambling often grows the entire market, including unlicensed sectors, instead of directing players to regulated platforms.
The CFG criticizes certain state regulatory strategies as failing to comprehensively regulate the online gambling landscape. For instance, states like New York and Florida, which permit sports betting but not online casino gambling, experience sharp increases in per capita gambling losses. In contrast, states like Michigan and New Jersey, where both sports betting and online casino gambling are legal, see the greatest relative impact on consumer income.
The report counters the “zero-sum” theory that suggests licensed operators’ gains come at unlicensed operators’ expense. Instead, the unlicensed market expands alongside legal options, intensifying financial harm to consumers. CFG and Yield Sec stress the need for urgent regulatory reform that emphasizes not only legalization but also rigorous enforcement against unlicensed gambling platforms.
- SCCG Management. The Gambling Industry’s Global Connector. Access Here.
- Source: SCCGManagement.com