GeoComply Cites Costs of Illegal Sports Betting in Latest NFL Activity Report

GeoComply reported a 56% increase in geolocation checks during the first week of the NLF season, compared to the same period last year.

GeoComply, one of the largest geolocation providers, identified $320 million of potential tax losses across six states which lack legal sports betting.

GeoComply reported a 56% increase in geolocation checks during the first week of the NLF season, compared to the same period last year. The first week of the season also saw 1.1 million new player accounts created across GeoComply’s US customer base, 40% more than last year.

The NFL is an important market, historically generating 60% of online sportsbook providers’ annual revenue. This year, the American Gaming Association is predicting 73.5 million Americans will bet on the NFL season. So, the industry pays close attention to the first week of the season’s activity. One way to do that is to monitor the number of geolocation transactions, verifying online sports bettors are physically within a regulated market. This year, a few states with newly legalized online sports betting sites helped the numbers surge. 

New Markets Boost Transactions and Account Creation

Ohio launched legal sports betting on January 1st, missing most of the NFL 2022-23 regular season. This year, however, the Buckeye State’s sports bettors showed up bigtime for the start of the NFL season. GeoComply processed 19.4 million transactions from Ohio and reported  133,000 new accounts.

While Massachusetts launched retail sportsbooks just in time for Super Bowl LVII, online sports betting didn’t debut until March. The first week of the NFL season, GeoComply processed 9.2 million transactions from the Bay State, including the creation of 59,000 new accounts. 

Meanwhile, Maryland’s online sports betting didn’t get underway until after last year’s NFL season kickoff. But sports bettors showed up in force this year, triggering 12.7 million GeoComply transactions and adding 61,000 new accounts. 

Opportunity Cost for States Without Legalized Online Sports Betting

Since the Supreme Court lifted the ban on sports betting in 2018, 24 states, Washington DC., and Puerto Rico have launched online sports betting. To date, these states have raised roughly $4 billion in aggregate tax revenue. Those states without legalized online sports betting are not only missing out on much needed taxes, but they are exposing their residents to the risk of using illegal and unregulated offshore providers.

GeoComply estimated the lost tax revenue from six states which don’t have regulated online sports betting. The roughly $320 million in lost revenue is based on the number of residents who tried to bet in another state’s regulated market. Unable to place sports bets legally, the bettors may have been tempted – or mislead -- into betting on illegal and unregulated websites. In its report, GeoComply gives examples of the type of misleading online advertising targeting sports bettors. The ads, placed by illegal sports betting operators and affiliates, mislead readers about both the safety and legality of black-market operators. 

The report concluded, “GeoComply’s data is a clarion call to lawmakers in the states to take action in 2024. Legalization is the clearest path to put the state in the strongest position to protect consumers, establish accountability and raise revenues. “