ESPN Advertises Benefits Of Legal Offshore Sports Betting

ESPN Advertises Benefits Of Legal Offshore Sports Betting

In a surprising development, a mainstream sports betting article actually got most of its premise correct. One of the frustrating things about the newfound mainstream attraction of sports wagering has been the obvious unfamiliarity most writers have had with this erstwhile taboo subject. They use the wrong terms, make the wrong attributions, and generally just don’t know what the hell they’re talking about. But in an unexpected 3900-word screed published yesterday, ESPN (of all outlets) actually advertises the benefits of legal offshore sports betting in the context of legal in-state sports betting. And Brett Smiley, the author of the piece, gets almost everything right.

Save for a few false characterizations of illegality (which is likely a nod to ESPN’s legal department more than anything else), Smiley’s examination of the offshore sports betting world is a good one, and he deftly explains that which most of us in the business have known for some time: that the overturn of PASPA (the Professional and Amateur Sports Protection Act of 1992) does not mean much for the established offshore sportsbooks that have been operating these many years that US-based sports wagering has been illegal everywhere but in the state of Nevada.

According to Smiley (and everyone else in the know), here’s why that’s the case:

Offshore Is An Entrenched Market

The offshore market is already entrenched and has been thriving for over two decades, earning some $150-400 billion in annual handle from US sports bettors. Millions of players happy with their sportsbook services will not jump ship just because their state now offers land-based or mobile sports betting.

When it comes to sports betting, offshore sites have a 20-year head start, at the very least. Their online platforms are refined, their offerings are robust, and their prices are well-considered behind a generation of market and trend analysis. For folks to jump ship, they’d have to have a truly compelling reason to do so. Local legal sportsbooks will have a hard time making any such argument, and they still haven’t figured out a headlining draw on which to double down. State-based books will have to explain why they’re better than offshore books, and they’ve not been able to do that – or even come close – so far in these (admittedly early) days of expanded legal US sports betting.

Slow State-Based Rollout

Legal state-based sports betting is destined to be an excruciatingly slow process in terms of rollout, with some states jumping right in while other states take a wait-and-see approach. Residents of Alabama, for example, may see that Mississippi has plenty of sports betting available, while they have none. With the negative aura around sports wagering removed right next door, AL residents may simply hop online and sign up at an overseas service rather than bother waiting on their own legislature to get its head out of the sand.

With sports betting becoming discussed in popular, mainstream media on a daily basis nationwide, folks in all 50 states are paying attention. And if their state is slow to offer the pastime in a convenient and accessible way, these potential bettors will simply do five minutes of research and decide that – with nothing to risk in terms of breaking the law – they might as well sign up at an offshore sportsbook to see what all the ruckus is about. Once they do that, then, they’re in, and by the time their state gets around to implementing sports wagering on its own turf, these bettors will be invested elsewhere, with outstanding deposits waiting to be wagered with and bonus rollovers waiting to be met, etc.

Asking someone to switch from the ecosystem they’re already invested in is always problematic, regardless of the industry. Trading your offshore sports betting account for a local state account is akin to handing in your iPhone for an Android phone, even though all the apps you’ve purchased and first-party services you use aren’t transferable. In other words, switching sportsbooks isn’t going to be free for most users, so they’re more likely to stick with what they know and stay where their money is.

Representation Without Taxation

Taxation, while the sole motivator for the states legalizing sports betting, is also a hindrance to the customer. When your state, in making sports wagering legal, also demands a cut of the sportsbook revenue (which can be anywhere from 6.75% to 51% depending on which state you’re in, with Nevada and Rhode Island representing those two ends of the spectrum so far), that cost is passed along to the bettor in the form of an increased house take. This makes bets “more expensive” and payouts less profitable compared to those available at offshore books, who don’t have to factor in taxable revenue.

The truth is that sports betting is typically a long-haul proposition. Many bettors get involved by placing just one or two wagers on big games or popular events (like the World Series or the Super Bowl), but most who stick with it will eventually start placing smaller bets more frequently. As such, any successful bettor is going to pay close attention to the vigorish (aka the “juice” or “house take”). If a spread bet on the Crimson Tide vs. the Sooners costs -130 at a New Jersey sportsbook but that same wager costs only -105 at an online sportsbook, that’s a huge savings. After all, why would anyone lay down $130 to win $100 when they could lay down $105 to win $100 on the exact same bet? This is a natural and permanent advantage of the offshore sportsbook.

Smiley also correctly says that offshore books will not report your winnings to the IRS, which is something that US-based gambling venues do as a matter of course. The implication here, of course, is that you aren’t taxed on your winnings by your state government or the federal government. However, that’s not exactly true. Certainly, you can neglect to claim your gambling income on your taxes, but that isn’t necessarily a benefit. Indeed, if you’re ever audited – and if you used fiat currency to fund your account – it could be a significant detriment. In other words, pay your taxes. It’s cheaper than the fine if you don’t.

Bigger Wagering Menus

Another straight-up benefit with legal offshore sportsbooks is that they have bigger wagering menus covering a much wider gamut of sports, odds, props, and futures. In addition to offering action on NFL, NCAA, MLB, NBA, NHL, NASCAR, MMA, world soccer leagues, cricket, rugby, tennis, golf, boxing, darts, bowling, Olympics, eSports, and almost any other professional or amateur sport you can think of, these books also offer action on things that are generally forbidden in legal US venues.

For example, in the US, events or contingencies that are deemed easily manipulable or knowable in advance (like the outcome of an awards ceremony or TV show or the like) are typically disallowed at sportsbooks. Ostensibly, this is to prevent corruption or “unfair advantages” among participants and players. Offshore books, however, routinely offer odds on elections, show finales, Oscars/Emmys/Grammys, and so on. Even if bettors aren’t interested in these kinds of wagers, the fact that they’re offered when “legit” books in the states neglect them outright exudes added value, and that is always compelling for consumers.

Everything Is Online

The final point that Smiley addresses correctly is that with offshore sportsbooks, the entire process – from registration to deposits to bonuses to bets to withdrawals – all happens online. Whether you choose to access your sportsbook of choice via a computer or through a mobile device, everything is more or less a click away.

Legal sportsbooks in the US are not there yet. Many state laws mandate that new bettors sign up at a venue in person before being able to use their apps or wager on their platform over the Internet. Additionally, many casinos and physical sports betting storefronts require bettors to sign up for or accept their bonuses (when such are even offered) in person.

While this is likely to change in the future to promote more rapid expansion, the fact that the “enrollment” process is so haphazard and pieced together at legal local books is a major negative compared against the 5-minute signups at most of the top offshore service providers.

Other Unmentioned Benefits

In his report (which, again, is surprisingly accurate), Smiley does neglect to include a few of the other benefits that legal offshore sportsbooks have over their physical, in-state counterparts. The first one is Bitcoin/cryptocurrency support. While some state-based books will likely accept Bitcoin and/or altcoins in the future, offshore books already do, and using these alternative electronic funding methods for deposits and payouts are far more secure – and anonymous! – than anything you’ll get at most local locales.

Bonuses are also something that you won’t get much of at local sportsbooks. Almost every top sports betting site that operates from overseas has a selection of bonuses and membership perks to choose from, and these constantly change with different sporting seasons and the like. You can get bonuses for first deposits, recurring deposits, crypto deposits, and so on, all of which add value to longer-term memberships. Granted that not everyone should accept these bonuses (due to their rollover requirements), the fact that there are so many available to you is a significant enticement.

Perhaps the most compelling benefit of legal offshore sports betting that Smiley skips over is the fact that, no matter how many states in America legalize sports wagering, the Interstate Wire Act of 1961 still applies. The Wire Act is a federal law that prevents any US-based sportsbook – whether on land or online – from accepting wagers across state lines. This means that whichever casino or book operator you sign up with in your state, you can only place wagers when you’re physically inside your state. Since so many people travel into other states as a matter of course during their everyday lives, and since sports betting is – for most – a routine pastime that they engage in on a daily or weekly basis, you can see how this can be problematic. A local sportsbook is all well and good, but if you can’t place wagers while on a business trip or a vacation, what good is it really? With offshore sportsbook operators, you do not run into this problem of “geo-fencing,” which means that your book is always available to accept your wagers, no matter where you are in the country.

Benefits Of In-State Sports Betting

While offshore sportsbooks are unequivocally the better option for the dramatic majority of US gamblers, there are a couple of real benefits of in-state sports betting that should be mentioned. First, if you’re wagering at a local casino (or via a local casino through an online or mobile app), you can actually challenge bet rulings if you believe you’re being unfairly denied a legitimate win. One of the required governmental oversight aspects is that every state-based book has some sort of “patron dispute process.” With offshore books, their word is law and that’s all there is to it. In the US at local sports betting venues, you can challenge your bookie if you think they’re holding out on you. That’s a definite plus, even if it’s a reasonably rare occurrence.

The other major benefit to in-state sports betting is that you can actually go to a real-life venue and place your bets, relax with friends in a ritzy sports betting lounge during the game (typically with food and drink service, and often with the latter comped), and collect your winnings on the way out the door at the end of the night. As an experience and an event in and of itself, online sports betting cannot compete on a visceral level with gambling at casino-based books in person. The same is true for real vs. virtual casinos – even with the proliferation of real-money online gaming (which, by the way, is also offered at all the top offshore sportsbooks), people still go to casinos in record numbers.

What Does The Future Hold For Offshore Vs. In-State Sports Betting?

Nobody really knows what the future holds for these two similar but distinct sports betting products, at least inasmuch as they relate to one another. Right now, they are nominal – but not practical – competitors, as the clientele they attract probably doesn’t have much overlap. Whether land-based US sports betting will eat into the market share of the offshore books in the future is also a mystery, and many foreign operators remain optimistic (and even enthusiastic) that the newfound public acceptance of sports betting will be a net gain for their businesses.

My guess? I think these two aspects of the betting industry will coexist – profitably – for the foreseeable future. I think that membership levels will rise on both ends, with a sort of give and take among the established sports betting crowd. New bettors in states with legal sports wagering are likely to get started via those unambiguously legal means, though many of them will “graduate” to higher-value offshore solutions. Similarly, I believe there are more than a few sports bettors who are uneasy with the perceived “grey area” that offshore sportsbooks represent (incorrectly conflated with actual illegal bookmakers in Smiley’s piece, which is the only real complaint with it), and these folks will slowly close out their accounts and transfer their gaming to local venues.

Regardless of what happens, USA online sportsbooks knows one thing is clear: There is room enough for US-based and offshore-based sportsbooks to happily coexist. With tens of millions of active sports bettors across America, the demand will likely always outpace the supply. And even if that weren’t true, any responsible sports bettor would take advantage of both avenues. After all, shopping lines for the best values is the biggest edge you can get in this game, so the more options and more vendors, the better.

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