Rhode Island regulators are stepping up efforts to crack down on offshore sports betting activities, and Attorney General Peter Neronha has ordered an investigation into illegal online gambling websites at the request of the Department of Revenue. This summer, the state lottery has issued cease and desist orders to six offshore sports betting operators, including Bifa, Online Betting, Bovada, MyBookie, Wild Casino, and YouWager. This move comes as the state considers opening up the sports betting market, which is currently operated exclusively by International Game Technology (IGT) through the official Sportsbook RI application. The state lottery has initiated an information solicitation process, with eight operators expressing interest in entering the market, including Bally's, BetMGM, DraftKings, and others. A bill aimed at ending the monopoly was passed in the Senate this year but failed to pass in the House of Representatives, following recommendations from Spectrum Gaming Group to add at least three operators. Several states across the US have also intensified their crackdown on offshore and unregulated gambling operators recently.
Regulatory Actions and Investigation Initiatives
Rhode Island Attorney General Peter Neronha, at the request of the Department of Revenue, has ordered an investigation into illegal online gambling websites. Regulatory bodies are strengthening the supervision of offshore sports betting and casinos as compliance measures before opening the market.
As a regulatory body of the Department of Revenue, the state lottery has already issued formal cease and desist orders to several offshore operators this summer.
Scope and Targets of the Cease and Desist Orders
The Rhode Island Lottery has issued cease and desist orders to six offshore sports betting companies, including: Bifa, Online Betting, Bovada, MyBookie, Wild Casino, and YouWager.
These operators are accused of providing illegal gambling services to Rhode Island residents without state permission.
Current Market Status and Monopoly Structure
Currently, International Game Technology (IGT) is the only legal sports betting operator in Rhode Island, operating the state's official Sportsbook RI application through an exclusive contract. This monopoly has persisted for many years but may change with the market opening.
Earlier this year, the state lottery initiated an information solicitation process to understand the interest of other operators in entering the market.
Potential Operators and Market Response
As of August 22, eight operators have expressed interest in Rhode Island's market opportunities, including: Bally's, BetMGM, DraftKings, Fanatics, FanDuel, SBTech, Kambi, and OpenBet.
Bally's, headquartered in Providence, already operates two casinos locally and an online casino set to open in 2024, giving it a geographical advantage.
Legislative Push and Bill Progress
A bill aimed at ending IGT's monopoly position was passed in the Senate this year with 30 votes in favor and 3 against, but failed to pass in the House of Representatives. The bill's sponsor, Senator Frank Ciccone, stated that exclusive operation does not align with the best interests of consumers and revenue generation.
This legislative action is based on recommendations from Spectrum Gaming Group, suggesting that the state ecosystem should add at least three operators.
National Regulatory Trends and State Actions
Several states in the US have recently intensified their crackdown on offshore and unregulated gambling operators, issuing hundreds of cease and desist orders. The Michigan Gaming Control Board has issued over 100 cease and desist orders to illegal operators, with Executive Director Henry Williams emphasizing the maintenance of a fair, safe, and legal gambling environment.
States like California have passed bills prohibiting dual-currency sweepstakes operators, and although Louisiana has not legislated, its regulatory body has issued 40 cease letters.
Market Controversies and Legal Challenges Forecast
Several states have also issued cease and desist orders to operators of sports event contract prediction markets, leading to state and federal lawsuits. The controversy focuses on whether these prediction markets constitute illegal sports betting and circumvent state laws.
Operators of prediction markets argue that they are federally regulated by the US Commodity Futures Trading Commission (CFTC) and should not be classified as gambling businesses.
Market Opening and Consumer Protection
As Rhode Island considers opening the market, enhanced regulation aims to protect consumers from predatory practices and unreliable services by illegal operators. Regulatory bodies balance the dual goals of market development and consumer protection.
The expansion of the legal market is expected to provide more choices for consumers while ensuring service quality and financial security.
Economic Impact and Revenue Potential
Opening the sports betting market could bring additional tax revenue and job opportunities to Rhode Island. Research by Spectrum Gaming Group indicates that adding operators could optimize state fiscal revenue while promoting market competition and innovation.
Economic benefits need to be balanced with regulatory costs and social responsibility measures.
Future Outlook and Implementation Timetable
The Rhode Island Lottery will continue to advance the information solicitation and market assessment process, with the timetable for potential operator entry yet to be determined. Legislative bodies may reconsider the bill to end the monopoly to align with market opening plans.
Regulatory bodies will establish corresponding rules to ensure a smooth market transition and compliant operations.
