Illegal gaming products are spreading fast across the United States, leaving regulators struggling to keep up as state officials rush to limit their impact on consumers, the industry, and tax revenues. From unregulated skill machines to offshore gambling sites and sweepstakes 바카라s, the grey market is expanding with little oversight.
has reported on the mounting frustration among regulators, who struggle to plug the gaps in their state laws while also contending with industry pushback.
Skill games in legal limbo
One of the biggest challenges comes from skill games, which have flooded convenience stores, bars, and gas stations in multiple states. In Tennessee, thousands of coin-operated amusement machines operate outside any gaming regulation. They are all over the state, said Stephanie Maxwell, deputy director and general counsel for the Tennessee Sports Wagering Council, during a panel discussion at Seton Hall Law Schools Gaming Law, Compliance and Integrity Bootcamp.
Maxwell explained that Tennessees laws create a strange contradictionwhile gambling is broadly illegal, the state has carved out exceptions for sports betting and fantasy sports. Yet, these machines fall into a legal grey area. Theres no regulatory body overseeing them, she said. They look like slot machines, and people assume we regulate them, but we dont. We tell them to call the district attorney.
In Pennsylvania, the situation is just as murky. Governor Josh Shapiros latest budget proposal estimated that 70,000 skill game terminals currently operate in the state without regulation. His proposal to cap legal skill games at 30,000 by 2025-26 would only account for a fraction of the machines currently in use. Meanwhile, competing legislative efforts suggest tax rates ranging from 16 percent to 52 percent, sparking a political battle between lawmakers, gaming operators, and businesses that profit from the machines.
Offshore operators continue to exploit loopholes
While land-based regulators are struggling to manage skill games, offshore gambling operators continue to evade US laws with little consequence. Michigan, however, is taking a hard stance. David Murley, deputy director of the Michigan Gaming Control Board (MGCB), said the state has been very aggressive in targeting illegal online gambling, including offshore sportsbooks and sweepstakes 바카라s. Meanwhile, New York lawmakers have raised their concerns against online sweepstakes 바카라s, with State Senator Joseph P. Addabbo Jr. introducing?Senate Bill 5935.
Were fortunate in that our statutes give us a lot of latitude, Murley said. Michigans approach has been to send cease-and-desist letters to offshore operators, forcing them to withdraw from the state. The latest target was BetNow.eu, which was given 14 days, from February 24, to halt operations. Murley noted that while Michigan has successfully forced some companies out, new ones quickly emerge to take their place.
This cat-and-mouse game has frustrated regulators across the country. Without federal action or uniform state laws, unregulated operators continue to find new ways to bypass restrictions, advertising to US consumers and processing payments through offshore networks.
A regulatory tug-of-war
The lack of consistency in state laws is a key problem. While Pennsylvania lawmakers debate tax rates for skill games, Michigan takes a more hardline stance, and Tennessee officials push responsibility to district attorneys. Meanwhile, New Jerseys gaming regulators, known for their strict enforcement, have yet to take a definitive stance on skill games or unregulated sweepstakes 바카라s. Recently, New Jersey Assemblyman Clinton Calabrese introduced bill A5196 to regulate the sweepstake 바카라 industry. This bill marks a shift in how these platforms will operate within the state.
Pennsylvania Gaming Control Board chief counsel Steve Cook highlighted another challengeensuring fair and consistent taxation. If these machines are similar to slot machines, they should be taxed the same way, he argued. However, business owners running skill games argue that steep taxes would crush their profits, turning the debate into a tug-of-war over rules and revenue.
As states take different paths, illegal gambling operators keep finding loopholes to work around the system. Unless a coordinated effort emerges, the patchwork system will continue to allow these products to thrive in legal grey zones.
For now, regulators remain in reactive mode, chasing down bad actors while new ones emerge to take their place.
