A from industry expert Richard Schuetz in Global Gaming Business reminded me of several articles about black market sports betting that I have written over the years, some predating the Supreme Court’s PASPA decision in May 2018. In these earlier columns, I laid out the advantages of offshore sportsbooks and illegal bookies over licensed and regulated sportsbooks in the US.

Black Market Betting Sites Aren’t Going Anywhere

This is a point of view I’ve maintained over the ensuing three years, and my feelings on the issue of black market betting sites have only grown stronger as legal sports betting markets continue to spread across US states.

My initial reasons still hold today. Since the onset of the legal US sports betting era, I’ve added a couple more reasons.

1. Offshore sportsbooks have far less overhead allowing them to provide better odds and promotions.
2. Regulated markets are less convenient and require customers to jump through hoops that aren’t present at offshore sports betting sites.
3. Offshore sportsbooks and black market sports betting sites often provide credit betting to their customers.
4. Because of points two and three, there’s a level of anonymity at offshore books and with neighborhood bookies that allows bettors to hide their activities from spouses or family – no credit card transactions or deposits into bank accounts, and no tax forms.
5. Competing interests (states, operators, sports leagues, and other entities) will chip away at the efficacy of the laws and produce suboptimal legislation.
6. Because legalization is happening at the state level, a crackdown on offshore operators, which would require federal action, is unlikely.
7. Licensed sportsbooks haven’t raised the bar and have proven capable of some less than honorable activities that the consumer was promised would be eliminated through regulation.
8. The rush to legalize has not only led to flawed legislation, but it’s also given us some downright dreadful legislation in a handful of states that has led to and undeliverable promises.
9. Despite evidence that bettors prefer legal, regulated sites, there’s an education gap and a failure to differentiate between licensed and unlicensed operators.
10. Licensed operators have failed to win over or even appease the professional bettors who drive a lot of the conversation on social media and sports betting podcasts.

The impact of points #5 and #6 on the above list could be – but are unlikely to get – eased. Unfortunately, there is little the regulated market can do to counteract the first four points. Regulated markets must pay taxes and licensing fees and aren’t going to relax player verification protocols, allow credit betting, or violate AML and financial reporting.

The good news is all of these new entries are fixable problems that can cut into black market gambling. The bad news is, the four structural advantages noted earlier will always persist. And like points five and six from the first list, I have a difficult time seeing the regulated markets resolving these issues.

Licensed Sportsbooks Can’t Do Much About Black Market Operators

That doesn’t mean licensed sports betting markets should take an “if you can’t beat them, join them” approach, and institute or emulate the advantages black market betting sites possess. Robust player verification, AML procedures, transparency, and oversight are practices we want in place.

Still, it does question the conventional wisdom that “good” sports betting legislation will cause black market bettors to shift to licensed sites. As Richard Schuetz points out in his column, offshore sportsbooks have the edge in that they aren’t constrained by unbending laws and regulations and can adapt to whatever landscape the licensed sports betting markets create.

Essentially, the black market exists to fill holes, and there will always be gaping holes in legal gambling and a significant subset of customers ready, willing, and able to participate.

For these reasons, offshore sportsbooks will continue to not only exist but thrive alongside licensed sports betting sites unless the legal sports betting landscape radically changes for the better.

If the goal is to make the black market as toothless as possible, everyone needs to do better and work on solutions to the problems that can be resolved.

Regulators Need To Differentiate

Lawmakers need to put forth better legislation. Legislation that doesn’t absurdly favor or kneecap the licensed operators, but at the same time, still provides the state with revenue and funding for problem gambling research and treatment.

Regulators need to be better educated to provide proper oversight and force licensees to differentiate their products from offshore sites. Prioritize official seals over deposit bonuses on website homepages; withdrawals should be as quick and seamless as deposits; bonuses and promotions should be transparent and easy to understand.

Operators need to step up their game, despite the financial burdens they face. The long-game goal is glaringly obvious: create a sustainable industry. That will only happen if operators go above and beyond what they’re required to do on the responsible gaming, customer service, and marketing fronts.

Consumers need to be honest in what they want and what they will put up with, so long as their top priority is met. It’s difficult for lawmakers, regulators, and operators to give the consumer what they want when the consumer (through talking heads and self-appointed experts) speaks outside both sides of their mouth. Far too many people and entities claim to be putting the consumer first. What they’re not saying is, their “consumer-first arguments” happen to boost their profile and align with services and projects they offer.

Unfortunately, even if everyone does step up their game, black market betting apps aren’t going anywhere.