Study: Strict Sports Betting Regulations Lead to Higher Illegal Activity

A study by the International Betting Integrity Association (IBIA) found that fewer restrictions and a greater availability of betting markets lessen the risk of illegal sports betting.

“Whilst politically attractive, this study confirms that bet restrictions are a blunt and counterproductive instrument,” said IBIA CEO Khalid Ali. “They don’t prevent betting, they just drive it into the unregulated market where most of the problems with sports integrity arise."

As Ali’s statement suggests, many politicians concede a variety of restrictions, such as betting on in-state colleges and universities, to control local gambling markets. However, the recent findings show that may be detrimental to the long-term safety of American gamblers.

The study was prepared by H2 Gambling Capital, a data and intelligence firm. One of its major findings was that bettors with access to a bevy of markets at legal sports betting sites often engaged in illegal offshore betting the least.

David Henwood, a director at H2, said that illegal sites become attractive options for bettors when “they offer a broader range of products than available onshore.” 

A perfect example of that is during the Super Bowl. While regulated sportsbooks will still expand their offerings to markets that aren’t usually seen during regular NFL games, such as if there will be points scored in the first six minutes, they don’t come close to matching the offerings of offshore books.

A few examples of Super Bowl prop bets that were available at offshore sportsbooks only include:

• If the performer will forget the words to the national anthem
• Which beer company will appear first in a commercial
• The first song of the halftime show
• What color top Taylor Swift will wear
• If Travis Kelce will propose after the Super Bowl

And more…

While these exotic props are rarely available, regulators are also quickly pulling odds for standard prop bets. More than 25 states wiped college props off the board due to an increase in harassment faced by student-athletes and following the pleas of Charlie Baker, the NCAA President.

Henwood said that reducing the number of betting lines available to legal customers is “counter-productive” and only entices them to target an illegal bookmaker.

The study later suggested that up to 47% of online sports bets in 2024 will be placed on live matches, also known as live or in-play betting.

That’s significant since a Minnesota Senate committee just forwarded an amended version of a sports betting bill that would legalize sportsbooks but forbid live betting. Lawmakers said the intent behind the amendment was to help the state establish the safest gambling market in the country.

If the bill is written into law, Minnesota will become the first state that allows sports wagering but does not offer in-play betting. It also contradicts the findings of the study.

The IBIA noted that Great Britain has an onshore conversion rate of 97%, which it theorized came from a wide availability of traditional and in-play betting lines. It also said that Australia and Germany produced onshore conversion rates of 75% and 60%, respectively, partially because they both outlawed in-play betting.

The study also predicted that Australia would gain $1 billion and Germany would gain $400 million in tax funding annually by allowing live betting. 

“The conclusions are clear,” said Ali. “If you want to protect consumers and sports from corruptors while maximizing tax revenues, then allowing a wide range of sports betting products is essential.”

38 of 50 states allow users to frequent legal sports betting sites. North Carolina is just a few days away from its March 11 launch of online sports betting, while legislation is also active in Alabama, Georgia, Minnesota, Missouri, and Oklahoma.