5 Differences Between State Licensed And Offshore Betting Apps

Learn more about the differences between legal, statewide-regulated mobile sports betting sites in the United States compared to offshore companies.

Thanks to the 2018 SCOTUS ruling concerning the abolishment of PASPA, legal online sports betting is now available in almost half of the statewide jurisdictions within the country.

With that said, most newcomers to the online sports betting market in the U.S. are unaware of the various distinctions between their localized, regulated mobile sports betting products and companies that operate offshore.

Due to offshore online sports betting companies who often advertise within the U.S. (and at times pass themselves off as if they were locally-regulated within a particular statewide jurisdiction), new customers can be easily confused when attempting to differentiate between the two.

This article aims to provide specific differences between state-regulated online sports betting companies and offshore services which do not operate under formal licensure within a particular state.

Formally Licensed U.S. Mobile Sports Betting Is “Ring Fenced” In Each State

One very clear, telltale sign that you are placing your real money online sports bets with a legal, licensed service provider is the fact that regulated companies are geo-fenced within each state they are licensed within. 

For example, FanDuel Indiana Mobile Sportsbook App products (like real money wagers) can only be accessed from within the Hoosier State. That doesn’t necessarily mean that you won’t be able to patronize FanDuel online sportsbooks in other states where the activity has been formally legalized, but it does mean that the Indiana-specific app will not be accessible if you are physically located outside the state’s borders.

In some cases, customers can still access their accounts to check on the status or outcomes of pending wagers, but real money bets cannot be placed online if you’re not located inside that specific state when attempting to do so.

Even if you’re traveling within the state of Indiana with your smart device connected to your real money online sports betting account, the service will automatically geo-block any attempted real money wagers the moment you approach the geographical boundaries of a contiguous state.

It is for this reason that many smaller statewide mobile sports betting companies will not offer “exchange wagering” products, as there may not be enough liquidity within a specific state’s market to support the launch of said product.

By contrast, mobile sportsbook apps that operate offshore (and therefore are not legally regulated within a specific state’s jurisdiction) do not identify themselves as state-based. So if you ever have an issue with an offshore mobile sports betting service, you will very likely need to consult with an entity from outside the United States in order to try to resolve it.

State-Licensed Mobile Sportsbook Apps Have HQs Within Your State

Simply put, the offshore services do not have headquarters physically located within your statewide jurisdiction – but legal, fully-licensed online sportsbook services actually do.

Legal online sportsbooks are regulated and licensed by the Indiana Gaming Commission in the Hoosier State. Offshore online gambling and sportsbook apps are not licensed anywhere within the state (or the nation) – even though their customer market is often heavily represented by unaware American bettors. 

The IGC (Indiana Gaming Commission) holds monthly meetings where numerous topics concerning regulated, fully-licensed online sportsbook apps and other legal in-state gambling are discussed. 

These meetings are released to the public and published on the IGC’s official website, where they can be accessed at an individual’s convenience. Topics covered in these meetings can range from licensure procedures and standards to authorized “fines” issued to in-state online sports betting companies for failure to adhere to protocols surrounding responsible gaming, etc.

In other words, compliance failures committed by licensed, statewide regulated gaming entities are generally identified, then enforced by state regulators. This is a publicly-available enforcement mechanism that does not exist for mobile sportsbooks that are not licensed within a specific state.

However, offshore online sports betting services are typically regulated (if they are “formally licensed” at all) by authorities in jurisdictions outside the United States. Any issues (with the exception of some minor inconveniences that can perhaps be remedied via a local agent) that customers have with these international, non-state regulated sports betting apps must be communicated through an overseas infrastructure.

And if an offshore company’s decision is not in your favor, there really isn’t any other commission, governing body, representative, or other means to apply pressure,reach a compromise, fully explain the problem, or request arbitration (aside from maybe customers who have very high profile social media presences).

Offshore Apps May Be At Risk Of Sudden “Illegal Gambling” Enforcement

Once online sports betting is officially approved and licensed through a legal, statewide jurisdiction, high profile complaints pertaining to “illegal” offshore services are sure to follow.

To drive home this point, have a look at this July 2022 CNBC article that explains how the regulated, state-licensed industry is suggesting a crackdown and/or enhanced enforcement measures against offshore companies.

This June 2022 letter to the U.S. Department of Justice shows that there is congressional support among gaming constituency House members to investigate (and potentially prosecute) offshore, non-state licensed online sportsbooks and other international iCasino companies that service the American market.

Now… does this mean that federal authorities will in fact curtail offshore iGambling activity that targets American sports bettors? There’s no definite answer to that.

But… one thing a savvy bettor can bank on is the fact that – once licensed in a particular jurisdiction – state-regulated services (and their accompanying infrastructure) will urge the DOJ and other enforcement agencies to investigate, shut down, and perhaps even criminally prosecute offshore companies.

This is because non-licensed mobile sportsbook apps have their headquarters offshore, yet actually still service the very same statewide markets as the regulated companies that are in compliance with a state’s mandates regarding tax collection, retail casino licensure ties, and  public communications.

So, in theory, pressure from the industry, politicians, and lobbyists could result in sudden enforcement actions against the offshore’s “worst actors” – which in some cases may be defined as the most popular non-regulated sportsbook apps that routinely poach customers from locally-licensed statewide markets.

If such federal enforcement actions against offshore, non-state licensed sportsbook apps do occur, there is a chance that American customers’ funds that are deposited with those international entities will be (at the very least) tied up and/or frozen for a significant period of time. 

For further reference, consult the following Wikipedia summary of the April 2011 “Black Friday” fallout related to the U.S. federal government’s enforcement actions against offshore online poker sites.

Legal Sportsbook Apps Enjoy Official Partnerships With U.S. Casinos, Teams

In the vast majority of U.S. states where online sports betting is licensed, the sportsbook apps that operate under a licensed infrastructure must do so via official ties with local, land-based casinos in that jurisdiction.

That is how mobile sportsbook licenses are issued and approved in most states… they must first work out a partnership with one of the currently licensed casinos in order to operate at all.

Although there are a few exceptions to this rule (like Tennessee), generally speaking, if an online sportsbook app is not officially partnered with an already licensed land-based casino, then it is not allowed to legally operate or offer its services to customers within that state. 

Offshore sportsbooks will not have these public ties with in-state or established regional casino companies… but the licensed mobile sportsbook apps do enjoy these partnerships.

FanDuel Sportsbook Indiana (partnered with Blue Chip Casino & Belterra Casino Resort)

DraftKings Sportsbook Indiana (partnered with Ameristar Casino)

PointsBet Sportsbook Indiana (partnered with Penn National Gaming d.b.a. Hollywood Casino)

The same can be said for NIL Sponsorship Deals with major U.S. universities or professional teams associated with leagues such as the NBA, NFL, NHL, MLB, and so forth. The legal, state-licensed apps will often reach an agreement with a U.S. university/professional sports enterprise (or one or more of their athletic programs) to become the officially named sponsor of a team, venue, curriculum, or related event that is organized by that higher learning institution or league entity.

You will seldom (if ever) see this with offshore sports betting companies. And, if you do see that, chances are you won’t see it for long. As a general rule of thumb, NCAA and pro teams prefer to partner with state-licensed and fully authorized mobile sportsbook apps that are legally and locally regulated. 

The few retail sportsbooks that are physically located within professional sports team stadiums are already licensed to operate in that state and on the premises of that venue.

Offshore Apps May Allow Gambling On Credit, Lack RG Initiatives

Responsible Gaming protocols are a big deal in the regulated, U.S. statewide online sports betting market. In fact, licensed statewide online sportsbook apps often collaborate and utilize machine learning to provide customers with proprietary tools that can pinpoint (and perhaps help curb) problem gambling behaviors.

You won’t be able to bet on credit when using a legal, state regulated online sports betting app to place wagers. If there aren’t enough funds to cover your bet when using a licensed online sportsbook, the bet won’t go through.

And while such guidelines (and the corresponding strict enforcement of them) might/perhaps/may potentially spark a few groans from would-be customers who register for a new account with their locally licensed sportsbook app, having sufficient funds to actually place real money wagers is an important prerequisite for participating in the legal, U.S. state-regulated online sports betting market.

Yes… customers may be able to receive “pay later if you lose” and/or “don’t pay until you owe x-amount” deals when patronizing offshore sportsbook apps, but such practices can lead customers to dire consequences from a problem gambling viewpoint. 

If you or someone you know (within the United States) has a gambling problem – whether that’s online, at retail locations, or both), please consult the resources provided by the National Council on Problem Gambling (NCPG). The organization’s toll-free helpline is available for Americans 24 hours per day by dialing 1-800-522-4700, or you can click here to set up a real time chat with a helpline specialist. 

Summary: Age-Based Limitations For Commercial Online Sports Betting

One final thought about the differences between state-licensed and offshore sportsbook apps is that – with very few exceptions (like Wyoming) – customers must be at least 21 years of age in order to sign-up for an account with a legal, state-regulated online sportsbook.

The minimum age requirement for almost all “offshore” sportsbook apps is 18+, and in some cases the offshore, non-licensed company may not have the infrastructure (or desire) to discourage underage gambling.

In summary, customers should look for the above-mentioned indicators that separate legal, licensed statewide sportsbook apps from their offshore counterparts when deciding which type of company to patronize.

Thank you for reading HoosierStateBets.

 

Author: Joann Chavez