Michigan’s state gambling regulatory agency, the Michigan Gaming Control Board (MGCB) and Connecticut’s Department of Consumer Protection’s gaming division, recently made headlines by issuing “cease and desist” letters to the popular offshore betting operator, Bovada’s parent Harp Media B.V (Harp). The state aims to protect its legal operators from losing market share thereby maximizing tax revenue and ensuring a safe market for its residents.
The MGCB’s letter cites violations of the Lawful Internet Gaming Act, the Michigan Gaming Control and Revenue Act, and the Michigan Penal Code. The MGCB accuses Harp Media of operating without a state-approved license, a serious offense that can result in hefty fines and even prison time.
Cease and desist letters, while a powerful legal tool, have their limitations, especially when targeting companies that operate outside the jurisdiction of the issuing authority. Offshore companies like Bovada/Harp often operate beyond the immediate reach of state laws and regulatory bodies. They are not regulated, overseen, or constricted by any such rules or legalities of the United States or any particular state. It is not a function of better or worse, just different.
These state regulator cease and desist letters do send the correct early warning to such unlicensed betting operators:
- We are aware this has become a significant problem for stakeholders
- We are actively trying to solve this significant problem for our stakeholders
While Bovada has been pulling out of states like Nevada, Maryland, New Jersey, and New York it is unlikely because they are worried about the legal consequences and more a show of good faith for a longer strategic plan, should they attempt the licensing process in North America.
A Different Approach
In these instances, jurisdiction matters. So does population definition. And largely, the latter is a function of the former.
A focus shift towards the U.S. established entity ecosystem that facilitates consumers to these unlicensed sportsbooks is a tangible step. These top of the funnel systems (content, search engines, affiliates, etc.) could be convinced, compelled, or otherwise regulated to sever their ties with companies like Bovada. That would immediately impact the access points of such unlicensed platforms.
Imagine a baseball umpire calling balls and strikes while officiating a football game. They have no jurisdiction in that instance. The rules are just different. It’s largely why the “Swiss banker” is such an important part of the Wolf of Wall Street and countless other stories. Or, why the U.S. Government’s attempts to change Tik Tok data privacy and business practices have proved mostly futile.
Many state regulations already place the responsibility of any content, advertising, or marketing associated with licensed sportsbooks on the licensed sportsbooks. Of course, there will always be individuals that “go rogue” and create partnerships with such unlicensed sports betting operators. Just like there will always be an illegal market for anything. But this demonstrates two critical components: jurisdiction and population definition.
So, what would actually happen if all the unlicensed sportsbooks were to be eliminated? In this instance, Occam’s Razor does not hold true. There would be significant shifts and burdens to the existing market participants. But that is a topic for another day.
In the case of unlicensed sportsbooks, like Bovada, while states cease and desist letters are a significant and critical step, additional, more targeted measures involving the companies and entities that facilitate such operations are required to yield definitive change.
