In May 2018, the U.S. Supreme Court struck down a federal law known as the Professional and Amateur Sports Protection Act (PASPA), thereby allowing states to pass laws that legalize and regulate sports betting within their borders. Since that time, nearly half of the states across the country have legalized some form of sports betting, with over $13 billion being wagered through these channels last year. But with an estimated $150 billion being illegally wagered annually on sports prior to this development, it’s clear that the legal, regulated American sports betting industry has a long way to go if it seeks to realize its full potential.

By and large, operators have been eager to innovate and are doing their best to woo new users. But from state laws that range from unhelpful to illogical, along with numerous media outlets that seem either unable or unwilling to distinguish between the United States’ legal, regulated sports betting industry and the illicit one that flourishes offshore, external factors are at play that will continue to hamper the growth of sports betting in this country.

A bet that is placed through legal, regulated channels is a bet that is 1) subject to a state-imposed tax, 2) monitored for fraudulent activity and 3) placed through a state-regulated entity that could be fined (or worse) if it fails to uphold certain guidelines ensuring the fairness of the betting activity. Yet across the nation, state legislatures are ignoring these objectives.

In states like Illinois, wagering on in-state college teams is prohibited. So while a bettor in Chicago can wager legally on the Cubs, his options for betting on the Illini require him to either travel to Indiana or place a bet online with an offshore sportsbook. Who does this help? Not Illinois, which loses out on tax revenues. Not the University of Illinois, which may be less able to monitor suspicious activity. Certainly not the Illinois sportsbooks. And not the individual bettor, whose bet is no longer subject to the protections offered by the Illinois Gaming Board. The only entities that are helped by laws such as these are sportsbooks in neighboring states and, more predominantly, those that operate offshore and serve the United States illegally. And those aren’t the constituents that legislators are elected to serve.

This is far from the only example of counterproductive legislation. In a number of states, including New York, mobile betting is prohibited, which means that someone in Manhattan can travel to an upstate casino, venture across the river to New Jersey, or stay on his couch and bet through an illegal operator.

And it’s not the legislators alone that need to look in the mirror. It’s also national media that has in numerous instances failed to clearly distinguish between legal, regulated sportsbooks and those that serve the United States illegally from offshore locations. Just last month, The New York Times, in a story exploring “How Does Coronavirus Affect Sports Betting?” elected to interview employees at BetOnline.ag and Bovada — two offshore sportsbooks illegally serving the U.S. market — instead of one of the multitude of legal, regulated sportsbooks operating legally within the United States.

It’s true within sports media as well; Sports Illustrated’s Jimmy Traiana ran an entire column highlighting the NFL draft betting options offered by offshore book 5Dimes. As American Gaming Association President and CEO Bill Miller noted on LinkedIn, insofar as “mainstream publications continue to legitimize the dangerous illegal market, blurring the lines between legal, regulated sports betting and the predatory, unregulated offshore market,” it will remain “especially difficult” for consumers to even know which is which.

Not surprisingly, it’s that very confusion that’s helping the offshore market remain vibrant. A study commissioned by the American Gaming Association (AGA) found that while 74% of American sports bettors believe it’s important to use only legal, regulated sportsbooks, 52% of bettors nonetheless participate in the illegal market. Why the disconnect? A whopping 55% of those who placed most of their wagers with illegal operators had no idea that they were doing so. Given the normalization of these offshore platforms by media outlets, it’s hardly a surprising outcome.

As American sports begin to resume, there’s hope on the horizon. States like Michigan have enlightened and informed legislators like Rep. Brandt Iden who spent countless hours learning the industry and ensuring that Michigan’s legislation was a recipe for the industry’s success. The AGA continues to make the case that the proliferation of legalized, regulated sports betting actually decreases the risks presented to sports leagues, teams, and athletes.

It’s a long road ahead, but here’s hoping for a future where Americans leave the illegal, offshore market behind and enjoy sports wagering through the legal, regulated channels that they have come to expect.

Pittsburgh native Evan Davis is managing director of sports betting and gaming for SeventySix Capital Sports Advisory and was formerly general counsel at Rivers Casino in Philadelphia.

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