Richard Schuetz urges US diplomacy to address offshore betting

Richard Schuetz has argued that the US will struggle to curb offshore betting operators until it addresses the issue through diplomacy. He said the threat of players moving to less-regulated markets is also holding back domestic safeguards.

According to Schuetz, an offshore market that is easy to access and runs smoothly tends to impose fewer betting frictions than a supplier based domestically. Because of that gap, domestic operators can push back against new requirements by claiming players will head offshore for a lower-friction option, he said. Responsible gambling and problem gambling controls fall within that friction category, he added, noting that offshore sites generally have weak or nonexistent controls in this area.

He said that when a state legislature, Congress or a regulatory entity proposes new controls, a domestic provider can argue that part of its market will migrate offshore, reducing tax receipts and domestic employment. Governing entities often resist actions that could damage a state's fiscal conditions or a politician's ability to fundraise from the industry, he said.

Schuetz cited the Merrick Garland Letter, dated 28 April 2023, sent by the top regulators in Nevada, New Jersey, Michigan, Illinois, Colorado, Louisiana and Mississippi. The letter asked US Attorney General Garland to prioritise stopping offshore books from accepting US wagers. Schuetz said he has been critical of such efforts since he first heard of them, based on his experience of working offshore.

His offshore assignment, he said, involved assisting an island in launching casinos, and over time he came to see that the U.S. Department of Justice was not the right entity to drive behavioral change in foreign countries. While living on that island he encountered agents from FinCEN, Homeland Security, and the FBI, he said, and their meetings took place at the US Embassy.

In Schuetz's view, the State Department is where the US should begin if it wants an offshore site to alter its behavior. He noted that the owners of offshore betting shops may be connected to powerful figures in the jurisdiction's political realm, so demanding that they stop taking American wagers could strain ties with the foreign jurisdiction. He added that the betting environment may also be a significant source of foreign exchange.

He argued that the State Department is better placed because it is attuned to the economies it deals with, and said a foreign country could improve trade relations, qualify for foreign aid, get help financing infrastructure or receive favourable tariff treatment if the shops were shut to US players. He said he could not understand why the US gaming industry does not take this approach, adding that it sometimes seems the industry does not want the offshore shops closed to US players.

Schuetz observed that coverage of US betting has been building across national news outlets, driven largely by accounts of people harmed by gambling, with young bettors featuring prominently among them. In his view, the domestic market would benefit from tighter responsible-gaming rules, and delaying their introduction will only produce further harm.

He said the US can continue to complain about offshore sites and attempt efforts that have little chance of success but make good public relations, or it can address the issue through the State Department.