Tennessee's Sports Wagering Council (SWC) has set its sights on BetOnline, issuing a cease and desist order that gives the Panama-based offshore sportsbook until June 16 to stop accepting bets from Volunteer State residents. This latest enforcement action underscores Tennessee's increasingly aggressive stance against illegal gambling operators.
The BetOnline order represents the newest chapter in Tennessee's systematic campaign to eliminate unlicensed sportsbooks. Since March, the SWC has levied more than $250,000 in fines against offshore operators, with BUSR recently hit with a $50,000 penalty for ignoring an earlier cease and desist letter.
The enforcement blitz has already claimed several high-profile casualties. BetUS, MyBookie, and Xbet collectively faced $150,000 in fines during April, while Bovada voluntarily exited the Tennessee market last November after paying $50,000. More recently, Sportsbetting.ag and Lowvig received their own cease and desist notices.
"Shuttering illegal sportsbooks will benefit the legalized market, our licensed operators and the public good in Tennessee, but illegal offshore sportsbooks are not going to go away easily," SWC Executive Director Mary Beth Thomas warned.
Tennessee's Sports Gaming Act provides regulators with significant enforcement tools. The SWC can impose fines starting at $10,000 for first-time violations, escalating to $15,000 for second offenses and $25,000 for subsequent violations. Critically, each individual wager can constitute a separate offense, creating potentially massive liability for persistent violators.
This penalty structure has proven effective in motivating voluntary compliance. However, offshore operators like BetOnline operate beyond traditional regulatory reach, making enforcement more challenging than domestic violations.
The crackdown extends beyond simple licensing compliance. Illegal sportsbooks typically offer products and services prohibited under Tennessee law, creating significant consumer risks. These operators commonly:
Extend credit to bettors, increasing problem gambling risks
Accept cryptocurrency payments outside regulatory oversight
Offer casino-style games and chance-based wagers like coin tosses or Gatorade color props
Allow underage betting without proper verification systems
Licensed Tennessee operators must maintain reserve funds to guarantee payouts, implement robust identity verification, and follow strict responsible gambling protocols - protections completely absent from offshore sites.
Tennessee operates the nation's largest online-only sports betting market, with handle exceeding $4.8 billion this fiscal year alone. Licensed operators pay a 1.85% tax on handle plus $750,000 annual licensing fees, revenue streams that offshore operators completely avoid.
The financial disparity has prompted Tennessee to seek federal intervention. The SWC recently petitioned the Commodity Futures Trading Commission to prohibit sports prediction markets like Kalshi and Robinhood from serving Tennessee residents, arguing these platforms constitute unlicensed wagering.
Tennessee joins eight other states raising legal concerns about the rapidly expanding prediction market sector, though federal regulators have remained largely silent on jurisdiction questions.
Tennessee's enforcement efforts mirror similar campaigns nationwide. Michigan regulators issued their own cease and desist order against BetOnline earlier this month as part of a broader initiative targeting more than 40 offshore operators.
The American Gaming Association estimates illegal sportsbooks handle approximately $64 billion annually across the United States, representing significant lost tax revenue and consumer protection gaps. The IRS valued the illegal market at around $700 million just before the 2023 NFL season, though industry experts consider this figure conservative.
Legal operators have largely supported Tennessee's enforcement campaign, viewing illegal competition as an existential threat to regulated markets. Offshore sites' ability to offer prohibited products while avoiding taxes and regulatory costs creates unfair competitive advantages that undermine legitimate businesses.
The SWC has warned Tennessee businesses against partnering with unlicensed operators, noting that in-state entities supporting illegal gambling could face criminal penalties beyond regulatory fines.
Despite Tennessee's aggressive approach, completely eliminating offshore operators remains difficult. These businesses operate from jurisdictions beyond U.S. regulatory reach, often shifting domains and payment processors to evade enforcement actions.
However, the mounting financial pressure and public awareness campaigns appear to be working. Bovada's voluntary exit demonstrates that persistent enforcement can achieve results, even against sophisticated offshore operations.
As Tennessee continues expanding its enforcement efforts, other states are watching closely. The success or failure of this campaign could influence similar initiatives nationwide, potentially reshaping the entire illegal sports betting landscape.
For Tennessee bettors, the message remains clear: stick to licensed operators listed on tn.gov/swac to ensure proper consumer protections and legal compliance.