Online Gambling Market Soars Amid Calls for Reform and Tighter Regulations

The global online gambling market is expected to reach a staggering $700 billion annually by 2028, according to estimates from the World Health Organization (WHO). While the legal sector flourishes, the illegal gambling market in the U.S. is also growing at an alarming rate. In 2023, YieldSec, hired by the Campaign for Fairer Gambling (CFG), estimated the U.S. illegal online gambling market at over $40 billion. With this trend continuing, experts predict that U.S. consumers and the economy could lose upwards of $1 trillion to illegal gambling by 2028.

Duty of Care: Legal Liabilities on the Rise

Derek Webb, founder of CFG, warns that the expansion of online gambling could lead to a surge in legal actions against operators. This is largely due to a growing expectation that businesses uphold a “duty of care” to prevent harm caused by their operations. The duty of care is a legal responsibility for companies to act in ways that prevent harm or injury to consumers. Webb stresses that gambling operators must take steps like implementing “know-your-customer” procedures to safeguard against money laundering and ensure that individuals are not gambling beyond their means.

“Class action lawsuits based on duty of care are becoming increasingly likely,” Webb said. “Operators must recognize the risk of litigation, especially when customers are encouraged to gamble excessively.”

Although the duty of care has not been widely applied in gambling-related lawsuits, it is gaining traction. For example, DraftKings is currently facing legal action for allegedly fostering a gambler’s addiction.

The Public Health Impact of Increased Gambling

As gambling becomes more pervasive, both legally and illegally, concerns about its public health impact are growing. The WHO has called for broad public health policies to mitigate gambling’s harmful effects, particularly its addictive nature. Among the WHO’s recommendations is to ban gambling advertisements, sponsorships, and promotions, especially in sports and cultural activities.

Research supports these warnings, with studies indicating that as gambling consumption rises, so does individual harm. The Total Consumption Model highlights that when the general population engages in more gambling, the risk to individuals increases as well. This issue is compounded when illegal gambling continues to thrive alongside legal operations, creating a vicious cycle of addiction and harm.

The U.S. Gambling Landscape: Challenges and Expansion

Since the 2018 U.S. Supreme Court decision to lift the federal ban on sports betting, 38 states and the District of Columbia have legalized it. According to the American Gaming Association, sports betting has skyrocketed in popularity, with 19% of U.S. adults engaging in sports betting in 2022. However, despite the legalization of sports betting in many states, illegal gambling operations persist due to weak enforcement.

Illegal gambling operators, like Bovada—licensed in Curacao—continue to operate even after cease-and-desist orders from state attorneys general. When operators like Bovada leave a state, new illegal operators often fill the void, highlighting the federal government’s failure to effectively regulate the sector.

The Tactics of Gambling Operators

Both legal and illegal gambling operators use strategies to attract new customers and retain existing ones, often making gambling more addictive. Offering sign-up bonuses and ongoing promotions, they encourage players to gamble more frequently and for larger amounts, pushing casual gamblers toward riskier behavior.

Webb argues that states giving tax breaks to gambling operators or promoting gambling in any form should be cautious about exposing themselves to legal risks. “States must reconsider their stance on gambling promotion and think about the long-term consequences,” Webb noted.

Legalization’s Mixed Results

While many proponents of gambling legalization claim it can reduce addiction and eliminate illegal markets, Webb cautions that this argument is misleading. He points out that such efforts place too much responsibility on individuals to gamble responsibly, while ignoring systemic issues that contribute to gambling addiction.

“The theory of responsible gambling puts the burden on the individual, neglecting the broader policies recommended by the WHO to address gambling harm,” Webb said.

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