SPORTS BETTING IN FOCUS

Free bets under fire in Colorado, SC House holds sports betting hearing and UN cites concerns over links between gambling and organized crime.

SPORTS BETTING IN FOCUS

Colorado Bill Seeks to Eliminate Free Bets Deduction

Over the last few months, a plethora of states have floated proposed legislation that aims to raise the tax rate on operator revenues from sports wagering.

Now, as the NBA playoffs kick into high gear, a Colorado bill contains a new twist. The bill, HB 25-311, seeks to eliminate a deduction used by commercial sportsbooks to lower their tax liability. In calculating net sports betting proceeds, operators have the ability to deduct all payments to players, all federal excise taxes and a small percentage of free wagers made by customers. Sponsored by Senator Dylan Roberts and two members of the Colorado House, the bill would remove the deduction for all free bets.

Under Colorado law, operators are allowed to deduct up to 2 percent of free bets in fiscal year 2025-26. The figure is set to drop to 1.75 percent for the following fiscal year. But if the bill is signed into law, the deduction will be removed by Sept. 1, 2025.

According to a fiscal note attached to the bill, the proposed change would result in an additional $11.8 million in revenue to the state’s sports betting fund for FY 2025-26. The authors caution that operators may respond by offering fewer free wagers. As a result, the state projects additional revenues of $10.6 million for FY 2026-27.

A portion of sports betting revenues are allocated to the state’s Water Plan Implementation Cash Fund. As of April 24, the Nuggets had odds of +6500 to win the NBA Championship. The Avalanche, another tenant of Ball Arena, have odds of +1100 to capture the Stanley Cup.

 

South Carolina House Committee Hears Arguments on Sports Betting

A committee in the South Carolina House of Representatives convened for nearly two hours April 22 for a hearing on sports betting, but adjourned without taking a vote.

The House Ways and Means Revenue Policy Subcommittee discussed three gambling-related bills, including H. 3625, otherwise known as the South Carolina Sports Wagering Act. Under the bill, operators would be subject to a 12.5 percent privilege tax on sports betting revenues. The tax would bring as much as $31.3 million in revenue to the state in fiscal year 2025-26, according to a statement of fiscal impact from the South Carolina Revenue and Fiscal Affairs Office.

A group of religious organizations, including the South Carolina Baptist Convention and the Roman Catholic Diocese of Charleston, submitted a joint letter to the South Carolina General Assembly. In light of elevated problem gambling trends nationwide, the groups urged lawmakers to oppose all three bills. The authors cited a study from UCLA which estimated that the legalization of sports betting has increased a household’s probability of declaring bankruptcy by a range of 25 to 30 percent.

While sports betting continues to flourish in Tennessee, it has largely failed to gain traction in the southeast and Gulf Coast regions. Already this year, a last-ditch effort to legalize sports betting failed yet again in Georgia, while a Mississippi bill on mobile sports wagering died in committee. Sports betting is available on a limited basis in Mississippi in casinos only. Legal sports wagering remains a longshot in Alabama.

South Carolina Governor Henry McMaster plans to veto any bills that attempt to legalize sports wagering throughout the state.

 

UN Office Concerned on Criminal Nexus with Online Gaming

Building on findings from an extensive investigative process over the last several years, a new report from a United Nations office shed additional light on the links between online gaming and transnational organized crime.

An 81-page report from the U.N. Office on Drugs and Crime describes the growing influence of illegal syndicates in southeast Asia and the connection with the world of online gaming. Supported by underground banking and cryptocurrency laundering, the enterprises have been responsible for billions of dollars in financial losses in recent years, according to the UNODC. In particular, the office called attention to the work of white-label online gambling websites, which employ intricate methods to obscure funds through fake tournaments, in-game transfers and illegal wagers, among other techniques.

In the U.S. alone, law enforcement attributed more than $5.6 billion in financial losses to crypto schemes in 2023. The amount is dwarfed by an estimated $37 billion in east and southeast Asia losses, according to the report. At present, two illegal bookmakers are awaiting sentencing in a sweeping investigation into the illicit southern California sports betting market. One defendant, pro poker player Damien Leforbes, used various cryptocurrency wallets to receive proceeds from his business and to pay bettors whom he owed money, according to a federal complaint.

Last December, U.S. Senator Marsha Blackburn of Tennessee cited the work of the UNODC during a closely watched federal hearing on sports betting on Capitol Hill. Blackburn and Nevada Senator Catherine Cortez-Masto have called on the Justice Department to examine the connection between organized crime and illegal sports betting ahead of next year’s World Cup. A UNODC study found that in 2014, criminal syndicates laundered approximately $140 billion through illegal and unregulated sport betting. The amount has likely grown since, the senators wrote in a letter to the Office of the Attorney General.

Moving forward, the UNODC recommends regulatory enhancements that address money laundering, virtual assets and online gaming oversight, with periodic review and reforms. The office also calls for stronger international collaboration and oversight mechanisms of investment activities in high-risk areas such as special economic zones.

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