Michigan Kicks Out Bovada
Well-Known Offshore Betting Site Booted From State
Michigan’s state gambling regulatory agency is seeking to end popular off-shore betting operator Bovada’s tenure in the state.
The Michigan Gaming Control Board mailed a cease-and-desist letter to Bovada ordering that the company stop operating in Michigan on or before June 12th, a week from today. As an off-shore operator, Bovada does not operate legally in any US state and currently offers bets in 45 US states.
So, Bovada leaving Michigan is something that could lead to a big cascading effect going forward.
Bovada was an even bigger player across the US before the repeal of the Professional and Amateur Sports Protection Act (PASPA) that was upheld by the Supreme Court in 2018.
In the aftermath of the repeal of PASPA, many states started to put together their own gambling laws, and now a huge chunk of the country is where sports betting is legal. Accordingly, if you don’t mind being taxed on your sports betting winnings, the appeal of using a site like Bovada has been diminished.
But, there is still an active demand for offshore books such as if you live in a state where online sports betting is illegal, if you don’t want to pay taxes on betting wins, or if you just like the interface and ease-of-use of said platforms and don’t want to open up accounts with whichever legal operators are conducting business where you live.
However, state governments have a vested interest in making sure the betting done in their states is done through legal means.
Michigan Has Begun Cracking Down
That brings us to the Michigan Gaming Control Board, which wants Bovada leaving Michigan and has already sent three other cease-and-desist letters to unlicensed operators in the past six months.
Specifically, in the case of Bovada, the MGCB is claiming that Bovada’s parent company is violating three state laws: (1) The Lawful Internet Gaming Act, (2) The Michigan Gaming Control and Revenue Act, and (3) The Michigan Penal Code.
Harp Media B.V., in allowing Bovada to operate in Michigan, is being accused of failing to obtain a state-approved license to conduct online gambling.
The Michigan Gaming Control and Revenue Act allows for fairly significant penalties to be assessed for conducting unlicensed gambling operators, including potential prison time for violators as well as large monetary fines.
Bovada sports betting is a particular concern in Michigan because online sports gambling has been legal there since December 2019.
There is a ton of competition in the legal betting space with 14 online sportsbooks and 15 online casinos that each pay $150,000 in license fees every five years.
The state wants to make sure that the operators are able to collect as much of the market share as possible, not only to maximize tax revenue but also to ensure that operators want to keep operating in the state.
If operators want to leave because they’re losing market share to illegal online sites like Bovada, then the state would be worse off.
Will Other States Follow Michigan’s Lead?
While it isn’t yet known is Bovada leaving Michigan is a done deal, Bovada has started to turn customers away from other states — including Nevada, New Jersey and New York — in recent months because of concerns about regulations that have been passed in those states targeting off-shore betting operations.
But, those states did not affirmatively take action directed at Bovada like Michigan did.
So, it’s certainly reasonable to expect states where Bovada is still fully operating to essentially follow what Michigan is doing.
As noted above, there is a major financial incentive for states to prove to legal operators that they will do whatever it takes to secure their market share in such a competitive industry by preventing illegal operators from siphoning off chunks of the betting populace.
It would be major gambling news if Bovada — a long-time presence in the online sports gambling world — further shrank back its operations in the highly profitable US market, and that would serve as a further deterrent to other illegal books as a sign that the regulatory framework is making it too difficult for them to safely and operate without facing the harsh penalties that could be handed down by the MGCB and other state-wide agencies.
Interestingly, Bovada — as of yet — said that it was not leaving Michigan, as relayed by a customer service representative from the website. So, the website could be planning to fight back or even seek its own legal remedies to continue operations in the state.
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