IRS Warns Sports Bettors That Betting With Unregulated Books Presents Added Risk
Posted on: September 16, 2025, 10:59h.
Last updated on: September 16, 2025, 11:07h.
- The IRS is warning consumers to avoid offshore casino websites and sportsbooks
- The IRS says such online betting platforms present added risks to bettors
The IRS is cautioning sports bettors to only use legal, regulated sportsbooks, both in person and online during this football season.
Football is the busiest time of the year for oddsmakers, as the gridiron commands more sports betting interest than any other sport. It’s also the busy season for illegal sports gambling websites and local bookies.
IRS Criminal Investigation Chief Guy Ficco oversees a staff of 2,300 special agents in 20 field offices in the US and in 14 countries abroad. Speaking with ABC News, Ficco says the public should only engage with sportsbooks that hold sports wagering licenses from their respective state.
If you gamble with a site that is not reputable, your funds, winnings included, may be at risk,” Ficco explained. “I would also say that fraudsters have looked for ways to compromise the financial system in many ways, including online casinos, and we have seen an influx of identity theft-based crimes.”
Most states where sports betting is legal list the sportsbook brands that are regulated. In New Jersey, for instance, the state’s Division of Gaming Enforcement (DGE) details the permitted sportsbooks.
Offshore Consumer Protections
While the many unregulated online sportsbooks that market to US consumers claim to be regulated in their host countries, such as Malta, the Isle of Man, Anjouan, Gibraltar, Curacao, and the Philippines, Ficco says the betting public has little recourse when encountering problems with their winning bets being paid, trying to make a withdrawal, or closing their wagering account.
Critics of offshore gambling websites say the foreign regulators mainly inspect the businesses to ensure that they aren’t harming their own interests — not violating foreign gambling laws or failing to provide patrons with customary safeguards, including fair odds, the execution of timely withdrawals, and responsible gaming options.
Many illegal casino websites and sports betting platforms go so far as to mimic legitimate land-based casinos in the US to deceive consumers into thinking the operation is upstanding.
The IRS requires taxpayers to report all of their gambling winnings, regardless of whether the money comes from legal or illegal gambling, on their 1040 (1040-SR) annual income tax return.
Crypto Casinos
Ficco said many illegal gambling websites deal in cryptocurrencies, and that presents additional layers of concern.
“None of us, or the majority of us, know all the inner workings of crypto, and don’t know all of the inner workings of how things are transferred from blockchains and such. It creates more vulnerabilities. So, I would just ask the prospective gamblers out there to do some due diligence before they place their wagers,” Ficco added.
Gaming consultancy Yield Sec reported in April that illegal online gambling websites generated an estimated $67 billion in revenue last year. The unregulated gambling market expanded by 36% and accounted for 74% of the US iGaming and online sports gambling market.
The Yield Sec study found that nearly nine in 10 US consumers have been exposed to illegal gambling content on the various media they consume.
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