Offshore casinos have been serving the gaming industry for many years. These sites operate in markets without government regulation. Popular online casinos like Bovada and Super Slots fall into this category.
Some people consider offshore casinos to be flat-out illegal. After all, these gambling sites haven’t received approval from the jurisdictions that they serve. But they are licensed in the places they’re operating from.
However, the issue is more complicated than simply labeling these casinos as illegal—especially because they do have licensing. The following post discusses more about offshore gaming sites and whether they’re unlawful or legally acceptable.
Characteristics of an Offshore Casino
Before determining the legality of offshore casinos, it’s important to look at their traits. The following characteristics define the typical unregulated gaming site.
Based in a Lax Licensing Jurisdiction
While offshore casinos don’t obtain licensing in the state or country that they serve, they do get licensing wherever they operate from. After all, every online casino needs a safe haven to put their home base.
While such jurisdictions aren’t prestigious, they usually have low fees and laid-back standards. Most notably, they don’t put many restrictions on where their licensees can operate.
Serves Unregulated Markets
More and more states and nations are legalizing online gaming. As a result, more regulated markets exist now than at any other point in time.
Even still, many countries have yet to take a stance on online gambling. These are exactly the markets that offshore casinos target.
Unregulated casinos don’t feel that they’re breaking the law when serving a gray market. They’ll continue providing online casino games to states like California, Minnesota, and Ohio until the state governments provide a clearly-defined stance on mobile gaming.
Accepts Bitcoin and Other Cryptocurrencies
Based on laws that I’ll cover later, offshore casinos have trouble finding payment processors. They get around this issue by relying on Bitcoin and other cryptocurrencies.
Bitcoin is a peer-to-peer cryptocurrency that cuts out governments and banks. Therefore, offshore gaming sites don’t need to worry about their players’ deposits and withdrawals getting rejected.
They often push crypto as a result by offering lucrative bonuses. These casinos also save themselves processing fees on credit cards and e-wallets when gamblers use Bitcoin.
Relies on Specific Software Providers
The pool of software developers that serve offshore casinos is fairly small. That said, you’ll see the same developers again and again in the offshore industry.
These software providers stack up well to the average developer in regulated markets. The ones mentioned here offer many popular games along with large jackpots.
What Laws Are Aimed at Offshore Gaming?
The United States has never officially banned offshore gaming on a federal level. However, it does feature multiple laws that have diminished the industry to some degree.
The Unlawful Internet Gaming Enforcement Act (UIGEA) is the only federal law that’s specifically aimed at offshore gambling. Signed into effect in 2006, it bans businesses from accepting illegal gambling payments.
Some people mistakenly claim that the UIGEA makes unregulated online gambling illegal. However, it’s not an official ban on the activity.
Judging by its language, the UIGEA doesn’t necessarily bar offshore casinos from serving Americans. Again, it only bans gaming sites from taking gambling-related payouts where doing so is illegal.
Accepting a deposit from Florida, for example, which doesn’t have a strong stance on online gaming, could be considered fine under the UIGEA. Receiving a payment from Louisiana, which does outlaw gambling, definitely wouldn’t be okay.
The federal Wire Act went into effect in 1961. It’s an outdated piece of legislation that was originally designed to prevent mobsters from collecting gambling-related payments across state lines.
However, the Wire Act has never successfully been applied for this purpose. It seems to be a mostly useless law by today’s standards.
States have the right to determine their own laws on online gambling. Some states are using this power to create a regulated market.
Such markets typically bar offshore casinos and any other unregulated entities. They only want tax-paying casinos operating within their borders.
A handful of states have outright banned internet gambling. Louisiana and Washington are two examples of states that have specifically outlawed online gambling.
The majority of states still fall into a gray area. They haven’t provided a clear stance on internet gaming in their state constitutions.
How Do Offshore Casinos Get Away With Operating?
By this point, you might think that the US or some other federal government would go after offshore gaming sites. To date, though, this scenario hasn’t happened yet.
Offshore casinos are not completely rogue elements. As discussed before, they do obtain licensing in certain countries.
Such licensing may not have the premier billing as a UK gambling commission license. Nevertheless, it still gives an offshore site some authority to operate wherever the license permits.
On one hand, you have a government issuing licenses and stating that its operators can serve certain states/countries. On the other hand, you have governments that aren’t necessarily thrilled with offshore gaming yet haven’t developed a concrete stance on the matter.
This dynamic occasionally leads to international disputes. Antigua went to the World Trade Organization (WTO) after the US passed the UIGEA.
The WTO ruled that the UIGEA constitutes unfair business practices. The US, meanwhile, simply ignored the WTO’s ruling. Antigua retaliated by allowing locals to sell copyrighted works created by US-based businesses.
In the end, offshore licensing jurisdictions have plenty of incentives to keep their gaming industries going. They do what’s necessary to protect their operators.
Do Offshore Gaming Sites Ever Get Busted?
The online gaming industry has never experienced a major disruptive event. A casino here or there has gone down over the years for violating laws. However, offshore gaming still remains strong as a whole.
The biggest hit against offshore gambling happened with online poker in 2011. Dubbed “Black Friday,” this event saw the US go after Absolute Poker, Full Tilt Poker, PokerStars, and UB Poker.
PokerStars emerged solvent following this mess even after paying a $731 million fine. The other sites, however, quickly folded because they didn’t even have enough money to cover their customers’ deposits.
Whether there’s a Black Friday waiting for online casinos remains to be seen. Thanks to Bitcoin, though, online gambling sites don’t need to turn to shady payment processors to operate.
Will Offshore Casinos Continue to Survive?
Many governments have jumped on the sports betting trend. They see sports gambling as a major cash cow that can bring in lots of tax revenue.
For whatever reason, though, they haven’t been as quick to jump on the online gambling trend. They’re taking their time deciding whether online casinos should be legal.
In the meantime, offshore gaming will continue serving many of these jurisdictions. It thrives on states and nations that haven’t taken a clear stance on the matter.
As long as governments continue dragging their feet on mobile gaming, Offshore casinos will continue making money. Therefore, you should expect to see these operators doing well for at least the next couple of decades.
Eventually, the industry could be hurt by a major legal event or it could be strangled due to widespread regulation. But for now, it remains successful and should continue this way for years.
Offshore casinos aren’t inherently illegal. Many of them obtain licensing in one or more jurisdictions and have some code of conduct.
They prefer to operate in gray markets that haven’t addressed online gaming yet. Meanwhile, these casinos avoid any jurisdiction that clearly outlaws unregulated gaming.
A state or federal government could make a huge issue about offshore gambling someday. However, they wouldn’t necessarily have a slam-dunk case.
Offshore gambling sites are pretty good at toeing legal boundaries. They know where to operate in order to stay on the right side of the law.