Illegal Sports Betting in Massachusetts Remains Steady

Massachusetts Struggles to Curb Illegal Sports Betting Despite Legalization Efforts

Massachusetts took a bold step in 2023 by legalizing sports betting, hoping to diminish the illegal market. But new research reveals that underground gambling remains stubbornly prevalent. As the state tries to tighten its grip on regulated betting, the persistence of unlicensed operators poses a significant challenge to lawmakers and regulators alike.

Legal Sports Betting in Massachusetts: A Mixed Outcome

Massachusetts launched legal sports betting at its three major casinos—Encore Boston Harbor, MGM Springfield, and Plainridge Park—in January 2023, followed by the introduction of online sportsbooks two months later. The state imposed a 20% tax on online sports betting and a 15% tax on in-person wagers, expecting to generate upwards of $60 million annually in new revenue. Legislators hoped that legalizing and regulating sports betting would also deter the public from using illegal and offshore platforms.

However, a recent study by the UMass School of Public Health and Health Sciences suggests that the legalization of sports betting has not significantly impacted the black market. According to the study’s Social and Economic Impacts of Gambling in Massachusetts report, the percentage of bettors engaging in illegal sports betting has largely remained unchanged between 2022 and 2023.

Limited Impact on Black Market Betting

The UMass researchers observed a slight decline in the proportion of monthly bettors who exclusively used illegal avenues. However, the overall findings indicated that Massachusetts’ regulatory efforts have not substantially recaptured the illegal betting revenue. This presents a conundrum for policymakers who banked on legalization as a tool to fight unregulated gambling.

Rachel Volberg, a researcher with UMass, presented these findings to the Massachusetts Gaming Commission (MGC) in July. While her presentation primarily focused on problem gambling rates, it was the illegal betting data that caught the attention of the commissioners.

Jordan Maynard, MGC Interim Chair, expressed concerns, stating, “A significant part of our mission with legal sports wagering was to stamp out the illegal market. The underground betting world is not without victims, and ensuring a regulated environment offers consumer protections that illegal and offshore markets lack.”

Regulatory Challenges and Consumer Protection

The regulated betting environment provides numerous safeguards, including responsible gaming programs, player dispute resources, and assurance of payouts and withdrawals. In contrast, illegal sportsbooks offer none of these protections, leaving consumers vulnerable. Commissioner Maynard highlighted the risks: “If you have an issue with your bookie, your options are limited. But with a legal operator, you have the Gaming Commission to address any problems.”

Commissioner Eileen O’Brien noted that distinguishing legal platforms from illegal offshore sportsbooks can be confusing for consumers. She stressed the need for the state to increase public education efforts to clarify which betting options are legal and which are not.

A Need for More Time and Data

Given that legal online sports betting in Massachusetts is still in its infancy, only 17 months into operations, Volberg emphasized the need for more time and data to assess whether bettors will eventually migrate from the illegal market. She noted, “Many jurisdictions find it takes time for bettors to shift fully from unregulated to regulated providers.”

Despite the challenges, sports betting has significantly boosted state revenues. Since the first legal wager in January 2023, Massachusetts has collected over $166.6 million in taxes and fees from sports betting activities.

Massachusetts’ attempt to combat illegal sports betting through legalization has yielded mixed results. While regulated sports betting has brought substantial revenue, the persistence of illegal gambling highlights the complexities of eradicating deeply entrenched black markets. Continued efforts in consumer education and stricter enforcement may be needed to fully achieve the state’s goal of curbing unlicensed gambling activities. As Massachusetts navigates these challenges, it must balance the economic benefits of legal sports betting with the ongoing fight against the underground market.