Recent estimates by the World Health Organization (WHO) project the legal global online gambling market will reach $700 billion annually by 2028. Meanwhile, YieldSec, commissioned by the Campaign for Fairer Gambling (CFG), has estimated that the U.S. illegal online gambling market was valued at over $40 billion in 2023. Considering the market has been active for nearly 25 years, U.S. consumers and the economy are projected to lose at least $1 trillion to online gambling by 2028.

Derek Webb, founder and funder of the Campaign for Fairer Gambling, commented: “With this latest health guidance from the WHO, the prospect of class action litigation, predicated on duty of care liability, against the legal online gambling market has increased. This is especially relevant where consumers have been induced into gambling beyond their means. Operators should already implement robust ‘know-your-customer’ procedures to ensure that funds used are not laundered or derived from criminal activity.”

The concept of “Duty of Care,” a legal obligation to prevent harm caused by negligence, has seen limited application in litigation against gambling operators. However, DraftKings is currently the subject of a lawsuit alleging that a gambler’s addiction was “nurtured” by the company.

Online gambling operators often use sign-up offers and ongoing bonuses to attract customers and intensify gambling activity. These tactics not only draw novices into gambling but also push casual gamblers toward riskier, excessive consumption.

Advertisement

Research on the Total Consumption Model shows that increased gambling consumption at a population level leads to higher individual harm. When legal online gambling is combined with illegal gambling, overall consumption rises, further exacerbating harm.

The WHO emphasizes the need for universal, population-wide public health policies to combat gambling harm. Among the seven strategies it recommends is “ending gambling advertising, promotion, and sponsorship of sports and other cultural activities.”

Some state attorneys general have issued “cease and desist” letters to illegal operators, such as Bovada, a site licensed in Curacao. However, enforcement remains inconsistent. If Bovada exits a state, other illegal operators often step in to fill the void in the absence of rigorous federal enforcement.

Webb added: “States giving tax breaks to any form of gambling or gambling promotion should consider whether they are exposing themselves or their regulators to litigation risk. Legislators and regulators cannot continue to rely on the theory of responsible gambling, which shifts the burden of harm prevention onto individuals, while ignoring the WHO’s recommended strategies to control online gambling harm. Promoting legalization as a way to reduce gambling addiction or eliminate illegal gambling is misleading and unsustainable.”

Latest analysis by online marketplace intelligence specialists, YieldSec, commissioned by the Campaign for Fairer Gambling (CFG), has revealed a stark contrast between legal and illegal online gambling activities during the 2024 NCAA Men’s & Women’s March Madness Basketball Tournaments in the US. YieldSec’s monitoring unveiled an overwhelming majority of betting-related social media posts and video content, reaching up to 73% and 78% respectively, directing audiences toward illegal betting and gambling operators.

YieldSec’s findings shed light on the strength of the illegal gambling grip on the American marketplace, with 378 illegal sports betting operators and 651 illicit affiliates aggressively targeting US March Madness audiences and claiming 64% of the total market share, generating $4.3 billion in illegal and untaxed wagering. The remaining $2.4 billion wagered legally amounts to just 36% of the total market share.

These statistics underscore the challenges in controlling the proliferation of unlicensed gambling operators that have historically capitalized on the fragmented legal landscape of online betting in the US.

Key findings for March Madness 2024:

Advertisement

1. Illegal gambling on March Madness comprised 64% of US online marketplace wagering ($4.3 billion Handle).
2. Total value of March Madness betting (legal and illegal) amounts to a handle of $6.7bn.
3. 378 illegal sports betting operators actively targeted the US.
4. 651 affiliates promoted illegal sports betting operators that actively targeted the US.
5. Illegals dominated social media content with up to 73% of all social posts in favor of illegal operators.
6. 78% of all video content that linked to March Madness betting was linked to illegal operators.

Derek Webb, Founder of CFG, said: “This Yield Sec special report illustrates the dire need for a comprehensive strategy to tackle illegal gambling in the US. The lack of a united government approach and lax oversight by states have only compounded the problem, enabling entities with dubious backgrounds to operate freely. It’s high time for U.S. leadership to spearhead a unified solution to this pervasive issue.”

Ismail Vali, Founder and CEO of YieldSec, said: “The overwhelming presence of illegal gambling during one of the biggest sports betting events of the year is a clear signal that enforcement and monitoring need to be prioritized. Our findings are a call to action for stakeholders across the board to intensify efforts in combating the spread of unlicensed gambling operations that exploit the online marketplace. With the dominance of illegals across our social media channels, it’s clear that the threats to American commerce, community and consumers are a lot closer to home than ever imagined.”

The Campaign for Fairer Gambling is now advocating for a cohesive governmental response to illegal gambling, urging the Department of Justice, Treasury, Federal Trade Commission, and the Trade Representative’s Office to consider the findings of the YieldSec report as a basis for developing effective countermeasures.