Rhode Island Puts Pressure on Offshore Sportsbooks Amid State Monopoly Uncertainties

Internationally licensed sportsbooks, operating in gray market in the US, have come under pressure in Rhode Island by gambling regulators. The Ocean State was the 7th state to legalize sports betting after PASPA was repealed in 2018. That is, after Delaware, New Jersey, Mississippi, West Virginia, New Mexico, and Pennsylvania, all of which put pen to paper and officially legalized sports betting in that very same year.

But Rhode Island’s sports offering is not as vast as, say New Jersey, Pennsylvania or most of the other legal sports betting states. It only has 1 legally authorized operator, Sportsbook Rhode Island, which is powered by Caesars Sportsbook. The crackdown on gray market sportsbooks comes at a time when Rhode Island is considering expanding its sports betting offering. And it is not alone in that regard.

Rhode Island Sports Betting Situation

The gaming authority in Rhode Island sent cease-and-desist letters to six international sportsbooks, pending a request from the Department of Revenue to investigate the situation. Among the sportsbooks targeted, there were some prominent US online sportsbooks such as Bovada, MyBookie, BetUS and BetOnline, all of which are internationally licensed platforms, but do not have the permissions to operate in Rhode Island from local authorities.

But how could they?

Rhode Island is one of the few states that has an outright state monopoly on sports betting. Ever since it greenlighted legal sports betting, the State Lottery took over and launched Sportsbook Rhode Island. No other operators are legally authorized to service Rhode Island bettors. They don’t even have local US sportbook brands such as DraftKings or FanDuel. No, Rhode Island bettors are constrained to only betting at Sportsbook Rhode Island. Any other platform they come across is technically unregulated in the state.

State Run Gambling Monopolies

We don’t tend to think of the US as having state-run gambling monopolies. They are quite rare in Europe, where legal sports betting has been around for much longer. Norway is one of the last countries to have a state run gambling monopoly, as Finland’s state run Veikkaus monopoly is slowly coming to an end. Most US states with legal gambling launched liberal markets with opportunities for licensed sportsbooks to obtain licenses (or tethered licenses – we will get to that a bit later on).

Sportsbook Rhode Island – the Single Legal RI Betting Operator

Sportsbook Rhode Island is one of the few exceptions. The sportsbook, which is powered by Caesars Sportsbook, has betting markets supplied by International Games Technology (IGT), who are the only recognized betting operators in the state. Bally’s, a popular casino games and sports betting provider, is actually headquartered in Providence, RI, but it is only permitted to operate two casinos in the state and one online casino. But that could be all set to change.

The contract with IGT is set to expire in 2026, and this may be the crucial turning point for Rhode Island bettors. A handful of operators, including DraftKings, Fanatics, FanDuel and BetMGM, have all shown interest in pushing for an open market from 2026 onward.

Other States with Monopolies/Limited Operators

Apart from Rhode Island, there are 5 states with a single sports betting entity, and thus a monopoly on betting. New Hampshire and Oregon, both of which legalized sports betting in 2019, have only one legally recognized sportsbook for bettors to pick from. In both states, the single sportsbook is DraftKings.

Delaware, which was the first state to legalize sports betting in 2018, has a state monopoly too. Only BetRivers Sportsbook can operate in the entire state, for online sports betting. There are retail sportsbooks, such as Bally’s Dover or Delaware Park, but the only legal online sportsbook belongs to BetRivers.

Similarly, Montana only has Sports Bet Montana, but it is more restrictive. You have to be on the premises of a licensed Sports Bet Montana retailer to make mobile bets.

Florida – Tribal Compact Monopoly

The last example is Florida, in which sports betting is generally illegal, barring an exception made through the 2021 Seminole Compact. Basically, sports betting, both online and landbased, is only allowed through the Seminole Tribe of Florida. And they have signed a 30 year exclusive gaming compact with Hard Rock Bet, which launched in 2023.

Florida had a pretty turbulent journey to legalized sports betting. The Seminole Tribe of Florida launched Hard Rock Sportsbook back in 2021, but without formal legislation being passed. And with several lawsuits on the line. After just 35 days of going live, Hard Rock Sportsbook agreed to temporarily suspend all operations in Florida.

Following back and forth lawsuits and proposals between the Seminole Tribe, Florida lawmakers and the US Court of Appeals, Hard Rock Bet returned to Florida in 2023. Other sportsbooks did try to appeal the monopoly, but to no avail.

Washington DC – Restricted Open Market

Then, there are states with very restrictive betting legislation. Washington DC, for example, has authorized BetMGM, Caesars, Fanatics, FanDuel and DraftKings. But, you can only use their online betting services if you are in close proximity of one of their retail outlets. The only sportsbook without such restrictions is, you guessed it, DC Lottery’s Gamebet DC.

How Sports Betting Legislation Works in America

However, we can’t just separate the monopolies from the open markets, as there are some states with unique restrictions that make it difficult, if not highly restrictive, for operators to launch their betting sites. In the states with open markets, generally, sportsbook operators can gain access by:

• Obtaining a sports betting license: Apply to the gambling authority, which will then review the brand, and should they agree to the taxation, player policies and other conditions, they will get a betting license in that state
• Getting a tethered license: A lot of states have this model. Sportsbook operators must partner with lottery providers, in-state casinos, tribes or local sports franchises, who will effectively regulate the sportsbook’s offering
• Hybrid casino tethered or tribal compacts: A mixture of casino-tethered and tribal compacts, mixing both retail and online sportsbooks. This allows for a huge volume of sportsbooks to enter the state, as there are more partnerships and alliance possibilities

Most US states with legal betting have casino-tethered licensing models. There are some with tribal compacts, but these are not so common. Open markets are the least common in places such as Wyoming or Tennessee, but they are growing. Monopolies are generally run by having one state lottery, which can partner with 1 sportsbook for a tethered license.

The Gray and Black Markets of US Sports Betting

America’s unregulated market for sports betting is highly expansive, and it covers a wide assortment of platforms and different betting products. From DFS operators to betting exchanges, P2P betting apps, social sportsbooks, or just plain internationally licensed books, it is highly varied. More so than the offerings at many of the states with open sports betting markets.

Having just one book is a real concern for bettors. And not just because you miss out on all the variety and competition. At the beginning of September, IGT’s servers went down for 75 minutes, leaving Rhode Island bettors stranded. The state sports betting monopoly in Rhode Island, and other similar states, often come under scrutiny for their lack of market depth, poor odds value, and lackluster interfaces.

Just looking at the logistics for operators, think about the vast collection of resources a nationwide international betting site has against the limited offering run by a state lottery. And that offering doesn’t need to be anything special, as there is no competition to drive down the juice, or raise the rewards and promotional bar up for.

So it really is no wonder why many Rhode Island bettors turn to, what the lawmakers refer to as, the gray or black markets. If not for the greater diversity of player props, then simply for their higher bonuses or better performing mobile apps.

What’s Next for Rhode Island?

The black market, as the lawmakers put it, is not something that can go away quickly. Many states have sent similar cease and desist orders to sportsbooks operating outside the periphery of the law – including the freemium sweepstakes operators, and some authorities have even tried to clamp down on prediction markets. An enforcement act in Los Angeles, California, prompted one of the biggest B2B vendors, Pragmatic Play, to exit the US sweepstakes market. New York, New Jersey, Mississippi, Connecticut, Louisiana and Florida have all pushed to press down on the hype surrounding social casinos and sportsbooks.

So in the broader scheme of things, these sites are still in a territorial battle across the US, and one that is tangled in lengthy lawsuits, motions and contentious decisions. Returning to Rhode Island (and other gambling monopoly states), the idea of opening a more liberal market may be a possible compromise to get players back to licensed sports betting. If the likes of DraftKings, FanDuel, and other big brands, come rolling into Rhode Island, it has the potential to win back customers who have turned to the gray market.

Such a movement would take a gargantuan effort on behalf of the authorities and lawmakers. But if Rhode Island could pull it off, it could set the precedent for other states with restricted or monopolized gambling markets.