American prosecutors demand tough action against illegal gambling sites from abroad

Fifty prosecutors from various states have asked the American federal justice system to take tough action against illegal foreign gambling companies.

In a letter to US Attorney General Pam Bondi, the prosecutors urge full cooperation. They want the government to prosecute these companies under federal and local law.

Prosecutors propose concrete plan

The letter asks the ministry to use various means to combat unlicensed gambling sites in the US.

The proposed actions include seizing websites and domains, blocking payments and freezing financial assets.

The prosecutors refer to previous successes. For example, on “Black Friday” in 2011, the government shut down websites that sold counterfeit products. In April 2024, Russian websites involved in cybercrime were taken offline.

Until now, prosecutors have mainly focused on warnings. For example, Letitia James, New York’s attorney general, sent 26 gambling sites a summons to stop.

But the new letter clearly states that the federal government has more powers and must use them. 

‘Because these websites violate federal law, the justice department may seize the domains and profits,’ the letter states.

Cooperation with financial institutions is also possible. Visa and Mastercard have already indicated that they are prepared to take action against the misuse of their networks for illegal gambling.

Illegal crypto casinos continue to grow

Critics warn that tough measures could drive players to crypto casinos. These operate outside the traditional payment system and are more difficult to control.

Globally, crypto casinos generated approximately $81.4 billion last year. That is five times more than in 2022.

In the US, unregulated platforms are growing faster than legal gambling companies, despite new laws on online gambling and sports betting.

A 2022 report by the American Gaming Association estimated that Americans were already spending $400 billion a year on illegal gambling sites. Of that, $338 billion went to online casinos and $64 billion to online betting agencies.

Illegal gambling sites dominate the American market

Since 2022, the share of illegal gambling has only grown. In 2023, unregulated platforms owned 71% of the online gambling market. They generated $40.9 billion in revenue at that time.

In 2024, this rose further to 74%, accounting for 67.1 billion dollars. By comparison, regulated gambling companies only generated 23 billion dollars in revenue that year.

According to the Yield Sec report, foreign websites, sweepstakes casinos and prediction markets fall under this unregulated sector. The authors argue that states need help from the federal government to stop this growth.

New state laws must curb illegal growth

State legislators in Montana, Connecticut, New York, New Jersey, Louisiana and other states have passed laws this year to criminalise sweepstakes casinos.

In Louisiana, however, the governor vetoed the bill, despite unanimous support. He pointed to the existing powers of the attorney general and the state gaming authority. They then sent cease-and-desist letters to forty companies that violated the law.

In California, a bill is pending that would ban gambling platforms with a so-called ‘dual-currency’ system. These platforms attempt to circumvent existing online gambling bans by using two currencies.

Native tribes warn of damage to their casino revenues

Native American tribes are also calling on governments to take action. They say illegal gambling sites threaten the growth of their own casinos.

In fiscal year 2024, tribal gambling generated a record $43.9 billion.

However, leaders warn that sweepstakes casinos and prediction markets could erode these revenues.

More than sixty tribes filed legal documents against the expansion of prediction markets such as Kalshi. They also support bills that target foreign gambling sites.Meanwhile, both legal and illegal gambling companies are growing, tax revenues are rising, and Americans continue to gamble en masse.