What the Nation’s Illegal Gambling Problem Means for Las Vegas

Illustration by Cierra Pedro

Illustration by Cierra Pedro

With the proliferation of legal casino gaming throughout the country, it’s tempting to think of illegal play as something from a bygone time. But if you’ve been keeping up with the news lately, you know that illegal gambling is alive, well and far more pernicious—and just as persistent—than the three-card Monte dealers who still pop up on Strip pedestrian overpasses.

Before you brush off these reports of illegal gambling crackdowns as insignificant to Las Vegas and little more than harmless, victimless crimes, it’s important to revisit history—not to mention the old idiom about those who don’t learn from history. After all, it wasn’t all that long ago when illegal gambling was one of the biggest moneymakers for organized crime. Attorney General Robert F. Kennedy himself believed that, to take down the mob, prosecutors had to first target illegal gambling—which was why he championed the passage of the Interstate Wire Act in 1961.

Kennedy believed that the Justice Department could roll prosecutions against bookies up the mob chain of command. It didn’t work that way in practice—bookies were much more afraid of crossing mob bosses than doing a stint in the federal pen—but the Wire Act defined the Justice Department’s anti-gambling efforts.

These days, federal and state prosecutors are frequently targeting operators of illegal sports betting rings—some tied to online operations, some not—and Internet sweepstakes cafés.

Jay Albanese, a professor and criminologist in the Wilder School of Public Affairs at Virginia Commonwealth University, is one of the nation’s foremost experts on illegal gambling. The author of Organized Crime: From the Mob to Transnational Organized Crime, he makes it plain that while individuals placing bets don’t pose a dire threat, the business of illegal gambling presents serious problems.

“There have been numerous documented cases,” Albanese says, “in which providers of illegal sports betting, black market machines, Internet sweepstakes cafés and illegal online betting have cheated customers on payouts and cheated the United States government by not paying taxes on profits. Furthermore, these profits have been found to support organized crime activity, such as money laundering and loan-sharking. In this way, illegal gambling operations support organized crime and victimize others, rather than benefit patrons.”

Translation: More than a half century later, we have not come all that far from the days of Kennedy, as illegal gambling still fuels further criminal activity, which extends far beyond the gambling itself. Unfortunately, nobody knows exactly how big the problem is nationally. Albanese says the last estimate—as much as $250 billion per year bet on sports alone—was back in 1999, long before the proliferation of technology that aids illegal gambling efforts today.

Now, we in Las Vegas may think of illegal gambling as someone else’s problem. After all, how many people who live or visit here regularly are going to play illegally when there’s a legal gambling emporium seemingly on every other block? But Albanese insists that online cheats could indeed threaten the prosperity of Las Vegas. “The actions of illegal gambling providers who cheat both customers and the U.S. government are used to smear the reputation of the legal gaming industry,” he says. “Too often, the public and policymakers use instances of convictions and forfeitures from illegal gambling enterprises as a source for speaking [negatively] about the legal gaming industry.”

Remember that Kennedy, in addition to chasing bookmakers, wanted to cripple the mob by raiding many of the Las Vegas Strip’s largest casinos. In this light, the American Gaming Association’s “Stop Illegal Gambling—Play It Safe” campaign, launched in June, makes perfect sense. Because of the potential for blowback against legal gaming, casino operators and law enforcement find themselves natural allies in the fight against the bad guys. And with illegal gambling having survived the era of the riverboats, grown powerful with organized crime and transitioned to cyberspace, it’s clear the fight isn’t ending anytime soon.

So next time you read a headline about an illegal gambling bust, read the story, too. Because it’s not a small problem, and not one that’s inconsequential to Las Vegas.

David G. Schwartz is the director of UNLV’s Center for Gaming Research.