Illegal neighborhood bookies alive and well leading to lucrative Super Bowl 2022
The tsunami of cash rushing through online sports betting outfits has been stark. It's the truest reveal yet of America’s insatiable appetite for betting.
“Americans have never been more interested in legal sports wagering,” American Gaming Association President and CEO Bill Miller said.
He projected 31.5 million Americans will wager $7.6 billion on Sunday’s Super Bowl LVI between the Cincinnati Bengals and Los Angeles Rams.
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“The growth of legal options across the country not only protects fans and the integrity of games and bets, but also puts illegal operators on notice that their time is limited,” Miller added.
The first half of Miller’s statement is true, but there’s fierce skepticism over the lobbyist’s follow-up point.
A different business model
Illegal neighborhood sportsbooks are thriving like never before veteran bookmakers contend the heightened interest in online sports betting only deepened their allegiance with customers who see the illegal shops — both domestic and offshore — as a better bargain.
“These new legal sports books create new customers and, at some point, some of those customers are going to be led away to an illegal bookmaker," one longtime bookie and bettor told USA Today Sports+. “They could be at work, their country club, a bar or whatever social thing they do, and all it will take is someone else saying, ‘Oh, I’ve got a guy I bet with … you can settle your bet every Wednesday, you don’t have to go through the system.'"
Far from the theory floated at last year’s Super Bowl, that online sports betting would send neighborhood and offshore sports books into oblivion, a veteran Southern California professional gambler speaking on the condition of anonymity because of the fear of criminal repercussions said, “Actually, it can only help. It shines a light on what a better product the illegal bookmaker offers.”
That theme resonated in conversations with other illegal bookmakers and bettors across the land. Each of the individuals spoke to USA Today Sports+ on the condition of anonymity because of the sensitivity of the matter.
Those running legalized shops explain their business model is different. They’re obligated to pay state taxes — a staggering 51% in just-opened New York — and must advertise mandatory warnings about gambling addiction.
Regulators also mandate legal books rely only on “official data” to set their odds. The companies that provide that service charge the books various percentages as steep as 12% of a sport’s revenue for their information, according to an industry official who works for a major legal sports book.
Freed of those dues, illegal neighborhood bookmakers operate with a tighter-knit clientele of their choosing. And should the bettors win, they veer from a tax burden too.
The bond fosters advantages for bettors that are lacking when they seek to wager through the legal and impersonal online shops.
“Doing business with a human being and not a computer … there’s still a lot of old-school people who that matters to,” said a New York-based bookmaker. “Some aren’t as sophisticated as others when it comes to phone apps.”
The cost of doing business
In some cases, the illegal bookmaker will allow customers to float debts for an entire month before settling up.
“That’s the main thing of all: getting to bet on credit,” one Southern California-based bettor said. “Think about it: I’m not pulling out my credit card for all to see. Who the (expletive) wants to put all that through the system and then maybe have to explain it all?”
Through the illegal bookmaker, “I can say, ‘Give me $7,000 on the Rams and $2,000 on the over and give me the hockey game for $4,000 and, oh, by the way, I’m going to bet the race at Santa Anita.' At the end of the week, if I’m down $14,000, I pay them. But it’s not on my credit card. What am I, insane? Why would anyone want to do that?”
Plenty do, obviously.
New York bettors wagered $1.6 billion in January, breaking the monthly record for any state despite opening for business eight days into the month. That generated $57 million in taxes for the Empire State.
New Jersey, Arizona and others are also awash in new revenue. But 20 states, including the Super Bowl’s home state of California, have yet to authorize online sports betting.
Some Californians have sampled online betting, venturing to nearby Arizona or Nevada, and retreated back to their neighborhood shops for more favorable deals.
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Another of the leading complaints toward online books is the prohibitive percentages — or “juice” — they skim from bets.
While a plain point-spread or over-under bet usually extracts a 10% fee from all bookmakers, requiring a $110 wager to win back $100, online books have angered astute gamblers by cutting into payouts on moneyline and proposition wagers.
In the Super Bowl, the Rams are a -200 moneyline offering to win the game straight up (bet $200 to win $100) even though they’re only favored by 3.5 points, while the Bengals are a +165 moneyline option (bet $100 to win $165).
“Good lord, who is going to bet that?” said a Southern California bettor aligned with three illegal bookmaking shops. “I don’t know one person.
“My guys provide a service that the legal bookmakers don’t because they provide much more fair lines and less juice. That’s huge. The big (expletive) juice at the online books? That’s crazy.”
The bettor’s neighborhood shop offers those same Super Bowl online options at -205 and +185.
“For whatever reason, the online places have decided they are going to stiff everyone,” one bettor, who uses a local bookie, said. “The average person betting for entertainment puts down his credit card, deposits $300 and doesn’t really care if Joe Burrow or Matthew Stafford is 3-1 or 5-1 to win MVP. And, of course, he should care.
“That’s money out of your pocket. You wouldn’t buy a loaf of bread for (expletive) $4 if you can get it down the street for what it should be: 89 cents. But the average, middle-aged America person doesn’t give it a thought, and they don’t think they have another option because they don’t have access (to a local bookmaker) and TV makes it appear you get beat up if you bet with one of those guys. That never, ever happens.”
FanDuel CMO Mike Raffensperger said as his platform contributes to state tax bases and brings attention to responsible gaming, he hopes use of "the gray and black market of sports betting" will subside.
Raffensberger said the industry needs to create regulatory frameworks to benefit legal operators, among other things, to dramatically diminish the visibility of illegal operators.
"I am very interested in a partnership with regulators and media partners where we have sustainable tax rates, where we create experiences to make it easy and better to be betting with a legal sportsbook," Raffensberger said. "Frankly, people operating illegally shouldn't have a foothold in the United States of America."
Another one of America’s most powerful online bookmakers said unregulated domestic and offshore rivals can only offer better odds, less juice and higher betting limits on props because they are illegally skirting the taxes and accountability the government demands.
Plus, he vented, they’re benefiting from the onslaught of legal online betting advertising.
“There has been little to no federal support of mitigating illegal gambling activity,” the online bookmaker said. “I’d think if you want to collect tax dollars from us, you would do everything you could to make sure the ones paying your tax dollars can be successful.
“You’ve got to spook the herd to get the marginal (bettors), and that requires the government to go after the average Joe and throw a bloody body in the street. But until they prosecute the hell out of these people betting illegally in a state where it’s legal to bet, they’re not going to spook the herd.”
A longtime New York bookie said he doesn’t expect that to happen, saying he once accepted betting action from six judges of varying levels of courts.
“Nobody busts anymore. There’s no more convictions — it's legal, right?” he said. “With no indictments over the past 10 years, bookmakers are breathing easier. Nobody’s threatening to break down our doors anymore. As long as nobody's extorting people –— and (we're) not — nothing bad’s going to happen.”
Citing industry estimates 60% of potential U.S. customers bet illegally, Tipico Sportsbook spokesman Sunny Gupta said illegal bookmakers' profits are too pronounced as indirect beneficiaries of the rise of popularity in sports betting are too pronounced.
Like others in the regulated business, Gupta said legal protections and quality customer service are benefits illegal books can't provide.
'There's your juice'
Online books have offered special free bets and promotional offers, such as awarding 56-to-1 odds for those who pick the winning team of the Super Bowl on a maximum $5 bet.
But that won't last forever. According to one online bookmaker, they're giving away money to acquire players who aren't staying, so they'll need to offer a more competitive product in the future.
In the meantime, one longtime California bettor said he dabbled in legal online betting but found the flood of subsequent emails and restricted betting limits annoying and returned to his bookie.
“If I have a bad week with my book, they’ll give me a rebate – something like 5% – and that’s great customer service that keeps guys betting,” the bettor said. “That’s a way better deal than what Jamie Foxx offers over at BetMGM. You see all those guys on the commercials – Jamie Foxx, Peyton Manning, this J.B. Smoove.
"How do you think (Caesars) got the Manning family? There’s your (expletive) rebate right there. And your juice.”
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