The scale of illegal gambling in the State of New York was laid bare last week with a new report detailing how big the problem really is just as a number of arrests were made related to the issue as part of a mob takedown by the NYPD.
Analysis by technical intelligence provider Yield Sec, commissioned by the Campaign for Fairer Gambling, revealed that as much as $1.9 billion was returned in Gross Gaming Revenue (GGR) from wagers with unlicensed sportsbooks in New York during 2023.
That compares with $1.69 billion in GGR for the nine legal sports betting sites operating in the Empire State. The report further suggests as many as 860 illegal sports betting and casino operators actively target New York.
News of the staggering amount of money involved in the gambling black market came as 17 individuals were accused of running an illegal gambling enterprise in the Empire State worth an estimated $22.7 million. Charges followed on June 5.
The 84-count indictment reveals an estimated 70 bettors became entangled in the unlawful betting ring, racking up massive debts that were then serviced by a high-interest loan sharking scheme that returned up to half a million dollars a week.
Illegal gambling costs the State of New York big time, notably in lost tax revenue. New York’s legal sportsbooks are taxed at a 51% rate on their Gross Gaming Revenue number. In 2023, sports betting activity resulted in the state collecting $862 million in tax.
Applying that 51% tax rate to the estimated $1.9 billion wagered illegally in New York effectively means the state missed out on $969 million, a colossal amount. Bettors who use offshore sportsbooks also avoid paying taxes on their winnings, further reducing government revenue from gambling.
There are other societal harms resulting from illicit wagering. These include that such activity is often linked to organized crime and that individuals placing bets with illegal providers are not safeguarded as they would be with a licensed sportsbook.
The criminal charges brought last week in relation to an illegal gambling operation are alleged to involve members of the infamous Gambino crime family. Those involved were charged with multiple crimes, including enterprise corruption, first and second-degree criminal usury, and first-degree promoting gambling.
Promoting gambling in the first degree is punishable by up to a four-year prison sentence. There are swathes of other illicit gambling charges that can be prosecuted at the Federal level by the US Attorney’s Office. The crime of enterprise corruption is a high-level felony offense with a guilty verdict carrying a mandatory term of imprisonment.
For the individual who places illegal wagers, offshore sportsbooks are often lawful in the jurisdiction in which they’re based. However, New York has pursued criminal prosecutions against those making bets in the state using an offshore or otherwise illicit operator. The laws on illegal gambling are complex and to avoid any complication, the only sensible route for New Yorkers is to use a licensed and regulated sportsbook.
