The US online gambling market is overwhelmingly dominated by unregulated, illegal operators who are siphoning billions of dollars in revenue and tax income, while legal operators struggle to survive due to a lack of comprehensive product offerings and effective market control.
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Hello everyone. Today we're joined by
Isma Vali, the founder of Yieldtech and
the current president of GCI Gaming
Compliance International. We had Ismile
on before, but since his company has
been acquired, welcome. Nice to have you
here again.
>> It's a pleasure to to be here today and
happy new year to you.
>> We're recording this on the 1st of
January 2026. So, first of all, happy
new year to you. There's a lot of news
in gambling these days and there's two
things I want to discuss. One of them is
your upcoming report on the state of
gambling in America and the other one is
the latest case against Drake the rapper
for all sorts of allegations including
promoting of unlicensed crypto gambling.
Tell me a little bit about the report
that you guys put together. So we put a
report together for our client, the
campaign for fairer gambling which is
founded and funded by a gentleman called
Derek Web. Derek made all of his fortune
in the gaming industry and he campaigns
to bring a fair and safe marketplace to
jurisdictions all over the world. Most
uh clear focus is in the United Kingdom
and in the United States. So we've been
working with Derek for just over three
years now and we've done the most
comprehensive analysis of monitored
behavior from the audience and their
activity across sports betting, casino,
poker, including things like crypto,
including things like predictors, all
these new innovative products that are
coming through and obviously the split
between legal and illegal gambling. So
in America we have an issue between reg
what's regulated, legal and licensed,
what's unregulated, illegal and
unlicensed. right now that's running at
74% of the marketplace is going towards
unregulated brands. 26% is going towards
regulated brands. But in America, we're
at this tipping point where yield on its
2024 work and basically called out
America as it's a marketplace that needs
to basically do things during 2025 to
move the marketplace away from this
illegal control. That hasn't happened.
our halfyear work which is about to come
out on the 7th of January. Our halfyear
work is basically showing the
marketplace is staying static. 74% going
to unregulated brands, 26% going to
regulated brands. But the real headline
here that's that's worrying is we had
103 legal licensed online gaming brands
in America who pay tax, provide jobs,
provide instate benefits with the supply
chain and who are also paying taxes. We
had 103 of those in 2023. 2024, we had 95.
95.
By the six-month point of 2025, we've
gone down to 57. That will end this
year. That will end the 2025 year around
the 50 mark. None of that boas is coming
from M&A mergers and acquisitions. None
of it's coming from people who are
buying each other and consolidating a
broad industry. It's coming from
attrition because these brands cannot
make the money they should be making
which then has a knock-on consequence of
not paying any taxes that the states
expect them to be paying. So we're in a
position now where the ecosystem is
really in trouble in America. And what
we're looking at is this thing getting
worse before it gets any better. And all
of that is coming down to the control by
unregulated unlicensed brands over the
American online gaming experience. That
number really caught my attention
because I just think this is absolutely
crazy. I see gambling ads everywhere.
You can't put on a football game without
seeing gambling ads. Everyone is
gambling. How's it possible that
gambling operators are still not making
any money?
>> You've had seven years of legal licensed
operations, the ability for states to
license their destiny relating to online
gaming. That's been going on since 2018.
Before that, you basically have since
1995, three decades now of unregulated
illegal gambling in America. So those
three decades have built up a huge
amount of customer database, customer
interaction, and fundamentally this. You
have 30 states licensed today for online
sports betting. There are seven for
online casino. The business model that I
grew up with. So my background prior to
setting up Yilsec and becoming president
of GCI. My background was 20 years of
gaming operations. So I've built some of
the world's biggest online gaming
brands, Poker Stars, Paradise, Poker,
and Sporting B. One lesson that business
learned was this. If you want to make
money in this business, you need to be
the one-stop gambling shop and you need
to have cross-ell. So your ability to
acquire database audience from sports
betting and move them into casino and
poker where the margin is higher. If you
don't have cross-ell, it's extremely
hard to make money because sports
betting is a razor thin margin. Legal or
illegal, it's a razor thin margin. What
the illegals learned was give everybody
the one-stop gambling shop, give
everybody what they want in one place,
and those guys have been there for three
decades. And they can take the audience
from each new Super Bowl, each new March
Madness every year, and push them into
casino and other products in the off
period for American sports. Legal brands
are everywhere and advertising
everywhere and they're funded by
investors and they are desperately
trying to claw their way into that
database. But as a customer, why would I
gamble with you when you don't offer me
benefit in the casino when I lose money
on sports, benefit in the sports book,
when I lose money in the casino? So
cross-ell is king and most legal brands
do not have cross-ell because of the the
legislative delays that have been
present there. I want to pause here for
a second before we dive deep into the
market dynamics. There's one number from
your from your report that just blew my
mind. 7 billion.
>> 67 That's how much illegal gambling
operators took from Americans last year.
That's 74% according to a report of
every dollar gambled online. Why is this
not the biggest crime story in America
right now? So in our view it has been
the biggest crime story in America for
the last five years since we set up
yields and that monitoring platform when
we first looked at this again we've
proven our platform and model over many
years now. So we have an exercise that
we do every year on the Super Bowl where
because we've seen so much data, we tell
people before it takes place, this is
how the audience is tracking. This is
what we reckon the legal uh revenue is.
This is what we reckon the illegal
revenue is. And everybody loses their
mind on social media every year and says
yield must be wrong. GCI must be wrong.
This can't be true.
Year. We've been proven right on the
legal number because that's the one
that's obviously declared and audited.
when the legal number comes out three
four weeks after the end of the the
Super Bowl in the late in late February
when that number comes out in March we
are always within 0.1% what the number
was in terms of the number of bets
placed the amount of money placed on
those bets so the platform's seen enough
that it's predictive analytics are
really great now as well so we can tell
you we know that the audience is
tracking like this we've seen the
prevalence of advertising this is how
much is going to be left behind now if
we're right on the legal number first we
are right on the illegal number because
it's an apples and apples methodology
used to get to those answers. Okay, so
the crime story in America, this is a
shocking case of money that's been
stolen from American commerce. All these
brands that should be making money in
legal online gaming are not making the
money they should. It's theft from
American community. All the money that
should have been paid in tax hasn't been
paid. Okay? Because these brands operate
and don't pay any taxes and they're all
based offshore. And then it's the
American consumer that ultimately
suffers because even though you might be
getting sweet offers from these illegal
brands, they are not just treating you
like a customer. They are also using
your data for other things. You'll find
that your use of illegal gambling will
lead to other things that you're now
being sold, particularly financial loans
and and payday loans. You'll be being
pushed that stuff because people see you
as a high-risk individual. There's
there's even an implication in the
streaming market as the latest Drake
case implies. But before we talk about
that, one thing I don't understand is in
the last few years, we've had an
impressive amount of legalization in the
American gambling market. That's why
things seem to have picked up so much.
And so many states promise that if
there's legalized gambling, then the
illegals are going to go away. Then the
legal market's going to take over. the
market's going to become clean and yet
according to your report the exact
opposite has happened. Why is that?
>> So I think there's an assumption here
which was if you legalize something that
has already always been prohibited. If
we legalize surely the marketplace takes
care of itself. The problem is crime
doesn't just leave. So unregulated
brands who've been there for three
decades now in America are not simply
going to roll up their tents and go
away. And that same assumption I've seen
the world though. So we've advised
dozens of regulators. I before I set up
Yilsec in my operations career, we'd
always get asked for kind of our views
on how they regulate and legalize the
marketplace. And there was always this
assumption which is not anybody's fault
to be clear. It's not regulators fault.
It's not the legislator's fault. It's a
fault of us as societies. I believe we
thought if we legalize an activity, it
will basically take care of itself. That
everyone will move towards like osmosis.
everybody will move towards I'll bet
with these brands. I'll bet with the
ones who are most advertised. That's not
the case because of how advertising
works nowadays. Even if I'm doing all of
the sponsorship deals, deals like having
ambassadors like Drake for example, even
if I'm doing all of those deals, does
that mean I'm the most frequented online
brand? And the answer is no. When I've
got three decades of experience in
digital marketing, when I've got three
decades of customer database I've built
up, that's an extremely sticky thing
that basically keeps customers on that
dark side of the internet. But the dark
side of the internet has become all of
online gaming [laughter] is what's
happened. So when you're looking at 74%
of the marketplace, 67 billion, $7.1
billion during 2024, that number will be
higher 2025, which is published
six-month numbers. will be coming back
to do the full year shortly. The main
problem here is this. Customers are
seduced unregulated online gaming in
America and they have been for decades.
So the big crime story here, this is
worth hundreds of billions of dollars
over three decades. Okay,
>> tax revenue that should have come from
this is worth hundreds of billions of
dollars over three decades. Nothing has
been done about this and you have to see
this as a heist in plain sight. Okay. I
think the other thing that has come up
and has sprung up and I think maybe has
changed the dynamics is that crypto
gambling has become a 14.4
billion monster. This is according to
you guys 43% of everything that
Americans see when they're searching for
gambling related terms. Is crypto
gambling just illegal gambling wearing a
costume? So crypto gambling has become
this breakout product and it's using the
word crypto to act as catnip for a
certain audience who basically don't
know any better and haven't educated
themselves in the real fundamental here.
So there's a bunch of people crowding
around this area some of them not to be
trusted who are telling you that this
thing exists and therefore you should
gamble with them. But there is a whole
bunch of noise in the crypto casino
area, the crypto gambling area which
everybody needs to be careful about. The
amount of money it's taking away from
the legitimate marketplace from the
community in tax tax payments is also
something to be concerned about. Now
>> I want to quote from your research
paper. Crypto gambling drives higher
frequency at much higher stakes than we
have ever witnessed in gambling history.
Are we seeing the invention of the
digital gambling equivalent of crack
cocaine with crypto gambling?
>> What we're seeing on crypto has it's
scared us in terms of we've not seen the
frequency and recency and stake sizes
that we're seeing from crypto gambling
by showing consumers their balance
through the matrix of it's all
cryptocurrencies now and they were
generally going up. We've seen brands in
the crypto gaming space in the last few
months when Bitcoin's been crashing.
We've seen brands marketing in ways they
never have before. Okay? So, previously
they would just be able to take your
money, show you your account balance
expressed in cryptocurrency, and because
you felt richer every day because
Bitcoin was going up, you gambled more
and they were constantly pushing you
through the notifications to, oh, hey,
we've got this really volatile stock
machine and this guy just won. all these
madeup promotions that they were coming
up with, lot of madeup kind of AI feeds
and deep fake feeds of people winning
money on slot machines, whole bunch of
stuff that was ending up on
YouTube from that. What we now started
seeing in the last few months is
basically when Bitcoin is going down,
the Ponzi scheme part of this, the
illusion that's been sold, the lie
that's been sold to American consumers
and global consumers on crypto gaming.
What we're seeing is brands are
panicking. So, they're doing things like
saying, "Oh, we're giving away half a
million dollars a month during half a
million dollars over Christmas week.
We're giving away um 20 $25,000 a day in
daily promotions." Crypto gaming brands
never did that stuff. They never gave
money away ever. Okay? Now, they've all
started doing it because this is the
first sustained period of Bitcoin doing
this. Okay? So, they've all been giving
money away like there's no tomorrow.
particularly in the period where usually
they'd be taking on customers handover
fist which starts on Halloween goes
through Black Friday goes through
Christmas and New Year and ends around
Easter so the casino growth period
globally is usually Halloween to Easter
that's when it grows okay then it dies
off a bit interest this year is
interesting 2026 because we have a year
of gambling without gaps so what we have
this year for most of the world's
audiences slightly less so in America
the World Cup taking place when it does
where it does means that people will be
gambling year round. Now for any gaming
brand you want to take on a whole bunch
of people from that Black Friday
Halloween Black Friday through Easter
period and then you want to keep them
activated through the soccer calendar
and now you've got a soccer calendar
that means there's no gaps anymore. So
you could make money from these people
every week of a 52- week year. That's at
risk with some of these crypto brands
right now because customers are kind of
going, "Hold on a minute. I don't like
what I'm seeing here. You're giving me
free money, but you're not showing me a
a balance that's increasing every day,
which is what you got me used to. So,
there's a piece of it, which is Bitcoin
price crashing means that these and it's
not been crashing in a kind of like one
day. It's been a sustained drop over the
last couple of months. That's changing
the year for crypto gambling. But
fundamentally, these guys in crypto
gaming have leared a playbook, which is
you mislead the customer into believing
that they are rich. Therefore, you get
them to spend more and you keep
reminding them that look, Bitcoin's
changed by this much today in this hour.
So, you can gamble more. If you then
strap to that products like predictors,
which lots of the illegal guys have been
doing. So, they've taken the stuff that
Calcian and Poly Market are doing
legally in America right now, and
they've strapped it to their illegal
operations overseas.
Crypto gambling with predictors in it is
a really dangerous product because it's
so wrapped up in your social media feed
and your news feed. And when you're
saying things like bet on the weather
tomorrow, that kind of stuff is
dangerous as a product. Okay, if you're
then establishing next to it the kind of
like Bitcoin's going up, so why don't
you gamble more now? It's really
dangerous. So there's part of it which
is there is a toxic mix taking place
with all gaming products going through
that crypto kind of rubric, that crypto
prism when they end up on the other
side. It's not a kind of it's it's like
taking the color spectrum from that dark
side of the mood, Pink Floyd. take that
color spectrum in reverse. It's going
into a darker place when it comes out
the other side of crypto gambling. So, I
think that there's probably a part of
this. I wouldn't go as far as to say
it's crack cocaine or gambling, but
there's something in this we've not seen
before as an industry which we're very
worried about right now.
>> I want to focus in on one of the things
that you said, which is that a lot of
this goes through big tech platforms,
right? You mentioned Google, it goes
through Google, it goes through
Facebook, it goes through social media,
Instagram, Twitter, etc. Are these big
tech platforms not in some extent
responsible for all the people that
they're funneling into these illegal casinos?
casinos?
If you look at it in terms of criminal
liability, they need to be on message.
They need to be knowingly taking that
revenue. Okay? Because the most
important part here is the intention
behind it. So, did they intend to commit
criminal offenses? I don't believe you
can look at any of those tech platforms
and say that they knowingly intended to
commit offenses. They are being
exploited and stolen from in the exact
same way that legal gambling is, that
state governments and the federal
government are. And the consumer is
being stolen from in America today. So
all of these platforms who are out
there, give you one example of this. We
found nearly three and a half thousand
illegal gambling apps across the app
stores, mobile uh phone platforms,
Android and Apple. Okay. When we brought
that to the attention of those mobile
platforms, they both had the same
answer, which was, "So, you're telling
us they screwed us?" Because the first
transaction for a legal gambling brand,
30% of that go to Apple or Android.
Okay. So, you deposit in of 100 bucks,
30 bucks goes to those platforms. That's
their first honor payment being on the
platform, having the apps downloaded
from the app stores. When illegal
gambling turns up, they don't say that
they're gambling because obviously to
get in the gambling section of the app
stores, you would need to provide a
license from a state government. You
would need to provide a national license
outside of America to show that you're a
licensed gambling company. Illegal
gambling gets in there. How? By
describing itself as sports information,
by describing itself as games. So, they
get in there that way. You download an
app. Maybe it's not even real money when
you open it, but within 24 hours, it
will switch to a real money app that has
gambling. Okay? So when we showed them
that this is what's going on out there,
they weren't aware of it because they're
going through their standard process,
running the app store, taking on new
apps, checking those apps, putting them
up there in certain sections where they
are being paid to be placed. Nobody
realized that there was this kind of
illegal gambling thing going, "Yeah, we
can just stuff in there." And there's a
whole supply chain behind illegal
gambling which basically exists to
ensure we can sell you cloaked
advertising on Meta. We see that one all
the time. One, one of our teams is an
undercover team. They engage with the
supply chain to find out who's selling
what and where. Basically,
>> absolutely. Professional criminals basically
basically
>> professional criminals who have had an
opportunity in just one niche area.
>> If we about you know monitoring and
policing tech platforms and about your
work around tech platforms, I think
another set of individuals that are very
much involved in this are influencers.
And I want to talk a little bit about a
case that was published yesterday on
December 31st. So, a federal racketeer
class action lawsuit filed yesterday
accuses stake us Drake adding Ross and
George Nuan of running an illegal online
casino scheme disguised as a social
casino. They the plaintiffs alleged
deceptive marketing via celebrity
promotions which misled users into
financial losses through unregulated
wagers using virtual currencies
redeemable with real value violating
federal and state laws. Moreover, the
complaint details stakes tipping feature
which enabled hidden crypto transfers.
For example, a $100,000 transfer from
Drake to Ross to fund bot farms,
inflating stra Spotify streams by
millions, manipulating algorithms,
diverting royalties, and harming
independent artists. This forms a
racketeering enterprise involving wire
fraud, money laundering like activities
and streaming fraud causing a $2 billion
annual industry losses per FTC data. Are
influencers basically the face of
illegal gambling in the US?
>> Let's just talk about this at a high
level. The most important point here is
this. The money, the money, the money.
That's what all of this comes down to.
Okay? So all of these things like
tipping features on these platforms and
stake is not the only one that has these
things. Tipping features are allowing
the movement of money openly on platform
regardless of any other controls. So
you're seeing there the corruption of a
marketing process is what's going on in
in plain view there. Let's get back to
influencers. I don't believe influencers
are to blame as are one of the symptoms.
What are the causes this issue? Cause is
illegal gambling. Okay. The cause is
consumers wanting access to the one-stop
gambling shop and not being provided it
under national laws and state laws. So
what are they doing? They're finding it
out there anyway and they have been for
three decades. So the big scandal here
is the robbery, the great illegal
gambling robbery from the American
public, from American commerce over
three decades. Hundreds of billions of
dollars that have left the country.
Okay? Hundreds of billions of dollars,
much of which has gone towards funding
organized crime around the world. Okay?
particularly in the consequences that
it's brought to America. If we look at
what influencers are responsible for, if
I'm promoting skin care, diets, exercise
regimes, and all of a sudden somebody
comes to me and says, "Well, you have
50,000 followers and we can pay you this
much, the money, the money, the money
again, we'll pay you this much to
promote unregulated gambling." Wait,
wait. On that on that note, according to
the lawsuit, Stake paid Drake hundreds
of millions of dollars to gamble on
stream and to post about crypto gambling
to Americans. Are celebrities really
making that much money promoting crypto gambling?
gambling?
>> Now, that's an interesting point to
raise in this case because Stake has
been various Stake have been variously
described in their relationships with
Drake over the years. Stake is a company
going back seven plus years. Their
relationship with Drake extends for most
of that time. They have been on record
as saying that he is a 10% equity holder
of the company. Okay? So he owns 10% of
the business. So whether they've given
him hundreds of millions of dollars or
not, he's certainly been wagering very
publicly on his stake account. He's been
putting bets on Super Bowl bets on Mark
Madness, etc., and posting those on his
social media feed. So you could look at
Drake as a super uber influencer in in
in many ways. Whether he owns 10% of the
equity of the company, which is not
publicly traded, neither here nor there.
So, I think there have been a number of
explanations for what Drake, the
rapper's involvement is, outside of his
name rhyming with the brand name Stake.
I think that was the genesis of that
deal. Obviously, Drake and Stake, let's
put those two things together and see
what we come up come up with. Let's look
at influencers at the high level. If any
type of influencer I am, I'm a musician,
I'm a celebrity, I'm a great-looking guy
or girl, and I've got lots of followers.
The lure of gambling generally will be
legal or illegal, we want those people
to promote gaming content for us because
a product an industry that features
products with risks always needs a more
palatable face to introduce that
product. Drake's a great face to
introduce that product. So when I'm
bringing it in, part of this is just
influencers who are being paid to place
audience in front of that thing. The
other part of this is obviously do the
audience understand these people are
paid. I think audiences get it now that
there's an influencer, they're getting
some kind of benefit for it. But it was
a lot less obvious in gaming than it was
in other. So when you're looking at
somebody's skincare routines and they're
telling you, "If you buy this cream, I
may get a share of that money." That's
obvious. With gambling, it was less
obvious because it's based on your
losses as a consumer that are going to
that influencer. Let's look at
influencers around the world. Outside of
the example with big famous celebrities,
look at what happened in Brazil
recently. Brazil had a whole bunch of
stuff where they were basically
criminalizing influencers for illegal
gambling and they were going and
arresting them, men and women kind of
thing. Although it did seem to be a bit
like a kind of undeclared war on women
and that it was a real witch hunt for
attractive looking women who were
promoting gambling and therefore kind of
beingounded for it. Some of those
influencers, particularly the females,
got taken away from Brazil to
[clears throat] places like Miami and
Colombia and Mexico to carry on their
influencer career from luxury penthouse
apartments. The Brazilian kind of
attitude towards criminalizing this
stuff completely backfired. And now you
had these celebrities who were now in
these gilded cages in Miami, for
example, posting and kind of posting
videos and saying which companies to
gamble with. All of which were
unlicensed illegal brands in Brazil. The
exact same thing will start happening in
America if you have a clamp down on
influences. The big thing to go for here
is ecosystem control. Bring it away from
the chaos. Bring it towards control.
There are a whole bunch of areas what we
call ecosystem essentials that you need
to be looking at here. One is obviously
the websites. Another one is the apps.
Another one is social media and
affiliates. That's where your crossover
happens with influencers. Influencers
are affiliates now globally. The biggest
type of affiliate. affiliate being
somebody that receives a fee or a
revenue share for promoting certain
content, which when that content is
clicked on, when that content converts a
customer, I get some revenue share back
for it. So, that's what an influencer
is. They're just another type of
affiliate. The same as going to any
website that's referring gaming content,
top 10 reviews, all this kind of stuff.
So, influencers have influencers have
become the biggest group and the most
prevalent group in terms of who makes
the money now in the online gaming
business for a fur.
>> Okay. Okay. So, let let me let me see if
I get this straight. I'm an influencer.
If you know, an influencer like Drake
will get paid hundreds of millions of
dollars to post that they lost a million
bucks gambling on a platform like
Stake.com. And then thousands of
followers who make maybe 50, maybe
$40,000 a year, they'll then go and make
large bets that they can't afford on
these illegal gambling platforms. So,
let's let's break it down. Celebrity
one. My name is Celebrity One. I'm
followed by millions of people around
the world. I'm approached by a gaming
company, legal or illegal, and they say,
"If you post and talk about our products
and you feature links to our products,
for every clickth through, we will pay
you X dollars. For every conversion, we
will pay you dollars." the deal that
they would have gaming not being a
particularly innovative business. It is
probably an affiliate revenue shared
deal and net revenue deals they known.
Okay. So for every customer who's
referred, every customer who does
clickthroughs, Drake and his management
possibly receive a certain amount of
money from that. Those deals globally
tend to run at 15 to 25% net revenue
share. So, for a $100 I lose as a
customer, having come through promotion
that Drake was behind for the brand
stake, I'm giving up 15 to 25 bucks of
every $100 I lose to that revenue share deal.
deal.
>> Yeah, I think I think these are these
are crazy deals. And I think one of the
case studies that stuck out from your
report was a case study of Ohio. So Ohio
legalizes online gambling and
immediately becomes a state where
illegal gambling operators steal the
most money per capita. What message does
that send to states considering legalization?
legalization?
>> Considering legal states considering
legalization, the main thing is this.
You need to kick the crime out and
legalize the marketplace. But if you
don't deal with the crime first, and
again this isn't telling everyone, there
was no rulebook to this. Okay, yields
and GCI discovered a lot of this because
we're monitoring all the time. There is
no federal or state platform doing that
monitoring. We're a private business. We
obviously sell that work to legal
stakeholders. The awareness, the
ability, and the actions that you need.
So, it's clear from states that have a
many states in America have an interest
in online gaming. Some states have a
love affair with online gaming. Okay?
And they basically have been voting with
their feet for illegal gambling for
years. It's great that the states
legislators and the regulators have now
got to those products, but on the basis
of well, we've only got school spending
right now and regulators are dealing
with what they can deal with. So, they
basically have limited budgets. They
have a limited set of products that
they're able to regulate. So, it's not
the regulators fault this stuff is still
going on out there. Not at all. Okay?
The regulators are dealing with the
reality of the marketplace. Legislators
often come to this and for their
political reasons they take a view of
we're okay with sports betting for now.
We'll see what it's like in a few years
time once the marketplace matures enough
for sports betting. But the problem is
the reality for the consumer is this.
All of the products are available all of
the time from illegal gambling. So I've
always been going there already. If you
now want to graft on top of that a legal
industry that has sponsorships with
sports teams that has television
presence on advertising, it doesn't
matter. And how is that stuff shifting
illegal gambling control away? Because
all of the conversions, all of the
money, the money, the money happens
where it happens where the rubber meets
the road online. So all of the things
where you sponsor NFL teams, all of the
things where there are sports betting
kiosks in stadiums, none of that
matters. The vast majority of the
revenue is online revenue, not retail
brick and mortar revenue. And the vast
majority of consumer interaction and
engagement is happening online. That's
where audiences are kind of seduced by
this and and interact and engage with
it. When you consider then that illegal
unregulated gambling has had this has
stolen the march on that by three
decades plus. Okay, they've always been
there. They've always been the one-stop
shop. They've always been the choice and
the home of consumers. But one feature
we always bring up every year, there's
always a brand every Super Bowl there'll
be a brand saying, "We're giving away a
$30 free bet to anyone this year. Old
customer, new customer. We're giving you
a free $30 bet on Super Bowl. Why always
that number 30? Why not 50? Why not 100?
30 because it's somebody's 30th
anniversary of being in America. That's
why it's the $30 pair. So they always,
we always see one of these each year in
the past few years because somebody just
hit their three decade point. That's the
real scandal here is this has been going
on in plain sight for three decades. And
yes, this is one of America's biggest
So, I did a little research after
reading your um research and I saw that
ESPN bet, the score bet unprofitable,
losing $60 million per quarter in 2025.
Fanatics projecting a $300 million loss
in 2025. Unprofitable. Barely
profitable. Caesar's Digital DraftKings
also barely profitable.
Why is this not huge news amongst
gambling operators? Why are they not,
you know, pounding the table trying to
get regulators to fix this situation for
them if they're really struggling so much?
much?
>> It's a really interesting point. So,
look, what you're seeing in America
right now, you mentioned ESPN, but
that's another brand that's folded now.
So, Pen National Gaming licensed that
from Disney, owners of ESPN. They
basically folded that up in the last few
weeks. So basically, you're looking at
the silent death of single product
operators across America now. So for all
these people who only have pretty much a
sports book that they can operate
legally because of the the lack of
opening the lanes on all products
because you're only able to offer one
product. That product runs at
singledigit profit margin if you're lucky.
lucky.
So what America is facing right now is
you're going from 95 operators to 57
because that offering is not interesting
to consumers. Okay. It also doesn't have
cross-ell which means that when I lose
money on sports book I can make money
back on casino and vice versa kind of
thing. And the customers also appreciate
that but that's what they're getting
from illegal gambling today. So why
would I move all of my revenue that I
provide to gambling companies? Why would
I move all of it to a sports book only
operator? And the answer is they're not
moving it all. They are taking advantage
of offers on the Super Bowl and March
Madness and anything else they can get
special offers for. But what illegal
gambling is being used as in America is
effectively like supermarket coupons.
I'll buy my milk there because it's
cheap, but I ain't buying everything
else there. I'm going somewhere else.
And that's what American consumers have
been doing in this period of a patchwork
quilt of availability by states. A
patchwork quilt of availability by
products for the legals. That's what's
been happening. So you are seeing the
tumble weeds blowing through the streets
of our kind of wild west town here where
illegals clearly have the control of the
marketplace 74% of it and that carries
from 2024 into 2025 first half the vast
majority of the revenue but what they
really have control of the crossell
across all products appeal that
customers are looking for they own that.
So crossell is owned by illegal gambling
in America right now. We need to change
that fundamentally at state levels for
legal gambling companies who are either
not making money or who are going bust
and giving their licenses back. The real
message is this basically everyone is a
legal stakeholder as we see them. So as
long as you are not a crook, you are
basically on the legal side for us as a
legal stakeholder. State governments,
law enforcement, regulators, operators,
affiliates, all of these people have a
part to play in this. Okay? tech
platforms as well, payment providers, banks.
banks.
Everybody has a part to play in this.
The most important piece to remember is
this. If I can't make the money from the
products I have today, there needs to be
an absolute fire alarm ringing for we
need to be licensing all the products
because they are being used by consumers
now already. Okay. So, all of this stuff
saying that we don't have gambling in
California for example. Yes, you do.
[laughter] Okay. It's just not taxed and
regulated and controlled and that's
being participated with by under 21 year
olds, over 21 year olds. We don't have
any idea about the self-exclusion parts
or vulnerable communities, we've got no
idea about it on the legal side because
nothing's been done. So when you start
saying that there is no gambling in
California, yes, there is. It's in our
top 10 list in this report. So you can
clearly see here that 100% of that money
from gambling online is going to
unregulated unlicensed brands. You can
clearly see what the tax impact could be
if you bring it in. But you also need to
be realistic about this. Do not think
that the day that you flick the switch
on legalization, everybody automatically
runs to Caesars's DraftKings and
FanDuel. They clearly don't. So these
brands are not making the money they
should. And we're now going into year
eight of this legalization experiment in
America. We don't have any federal
mandate for this. It's on a
stateby-state patchwork basis. And maybe
it's time for us to start saying perhaps
that state-by-state patchworkbook model
has not been working as well as it
should. Perhaps there needs to be some
federal intervention and help to help
states achieve control of the
marketplaces. And this is not all the
problem of regulators. Regulators by
definition are there to regulate the
legal licensed brands. Yes, they have to
have a view of the marketplace and where
crime is taking place, where unregulated
gambling is taking place and how that
can be seducing and bewitching the
audience. But fundamentally, their
mandate by law is you police these guys,
legal license brands, make them
compliant, make them observe age limits,
make them observe uh responsible gaming
conditions. Their problem is not
necessarily illegal gambling because
that's a criminal problem and that means
that law enforcement needs to get
involved. But quite often the stitches
between what the regulator sees in the
marketplace and what they can inform on
to the law enforcement professionals,
there's a gap there. Okay? And that's
because who's helping them monitor,
police, enforce, and optimize. Quite
often that will be us as a platform
helping clients of ours. But again, we
are a for-profit business. We need to be
funded to do all the work that we do
across what is complex technology,
expert human teams and finding those
connections in the marketplace through
the supply chain that make change
happen. But there are many many facets
of this you need to be looking at across
that the ecosystem and our state
governments are is the federal
government even funded to the extent
that we are able to look for what's out
there and what's happening to our
marketplace. When you put this in
context of this is an extremely
expensive problem, set of problems to
solve. Illegal gambling is never just
one problem. It's many. But when you
look at the amount of money that's been
taken from America, the amount of money
that's been taken from the states, the
amount of money that's been taken from
American consumers by unregulated
illegal gambling, it starts to put it in
sharp relief. This thing pays for itself
in terms of monitoring and policing, but
you just need to get control of it.
One of the things that blows my mind is
you've been monitoring this gambling
theft for years now and yet politicians
don't really seem to be doing anything.
Are they lazy? Are they incompetent? Or
are they somehow conflicted? What's
going on?
>> I don't believe you can point a finger
at legal stakeholders and say it's your
fault. It's your problem. You should
have done something else. What I think
you have to look at here is it's
extremely difficult to know what to do
in the face of criminal actions by
criminal actors. We don't really
understand how they operate. We don't
really understand something as simple as
mirrors and readers. So government goes
out, state government or national
government goes out and says, "Our
biggest problem is illegal.com. So we're
going to ban and block legalgambling.com."
legalgambling.com."
But nobody ever told them about three or
400 mirrors and redirects behind that
that will just push the audience to
other places and the same damn website
is still there. So you can block one
website and you can check it on your
phone. You can check it from parliament.
You can check it from the state congress
and you can basically go well that
problem is solved because we block that
website. They have no more business
coming from our state, our country.
Yeah, but they do because nobody types
in web addresses anymore. So all I've
had to do as an legal gambling brand is
basically go to all of my merchant
advertising accounts and go all those
ads on Facebook, all those ads on
Instagram, I'm now changing them to go
to this address instead of that address.
And that's how simple it is. Poland, for
example, have been having a cat and
mouse game with a really complicated,
overly complicated in my view legal
process where for every illegal gambling
brand found or complained about, they
basically go out there and say, "Right,
we're going to have a judge investigate
that illegal gambling destination. So,
let's call it illegal gambling.com. And
he's going to look at it and over six
months he'll check it every few days and
he'll tell us that yes, he was able to
open an account, place a bet and deposit
his funds and get his money back as
well. So, that's illegal gambling
because they're not licensed in Poland.
Poland's been doing that with several
international operators who basically
just come back and go, "Yesterday we
were on legal gambling one and today
we're on legal gambling 2.com and
tomorrow we're on legal gambling
three.com and every single time you need
a judge to come in and spend six months
sitting on this thing." So, it's a
nonsense, but illegal gambling brands
have just been playing this really slow
motion silly game of cat and mouse to
just show the Polish government kind of
like, "No, no, no, no. We don't care."
So, they've just been doing this for
years. So, if you have those kind of
processes, you need to change them
because how do we react to crime? How do
we react gaming? We need to be clear
that there is a better way of doing
these things. If it's like I always tell
clients this that basically look we are
not just going to show you the one
individual tree illegal gambling we're
going to show you the whole forest and
it will be overwhelming for you to deal
with this but we'll show you tree by
tree how you cut that down and stem it
off but the main point here is
understanding there are thousands
millions of trees the average
marketplace all of those issues need to
be dealt with everything from the
advertising the website availability the
payment promotion the links to SMS and
uh peer-to-peer messaging platforms. All
of these things need to be dealt with.
So, we break it down simply for clients
in terms of there are eight ecosystem
essentials. Everything from kind of
website promotion right through to
illegal streaming, which is one of the
biggest growing areas in America right
now, right through to affiliates and
influencers. So, find each of those
individual trees, show them that there's
an overwhelming forest there, cut the
path through it very simply. This is how
we get you towards a path of control
away from chaos.
So, taking a step back and thinking
about the big picture, the gambling
industry promised that if there was
going to be legalization,
you would see safety, you would see
transparency, and you would see
increased tax revenue. Your report
proves that all three of these are
basically wrong. Should states just
consider banning online gambling in its entirety?
entirety?
>> So, let's be clear. Lobbyists for the
legal gambling industry are the ones who
said these things. So proponents for
legal gambling have often said at the
beginning of this spectrum. Okay. So
seven years ago and for each state that
regulates, you have a group of lobbyists
who turn up who are paid professionals
who are basically telling you bring in
legal gambling. We'll get control of the
industry. We'll get control of the
marketplace. And no one's really clear
on those terms. So is it industry? Well,
there are two industries. One legal and
licensed, one illegal and unlicensed.
There's one marketplace in each state,
in each country out there. The main
thing here is this. I can understand why
people are pushing to kind of say we're
lobbying. We want to get regulated
gaming through the door kind of thing
for as many products as possible. So
people are saying kind of what they
think they need to to get the products
over the line to get state governments
to vote on these things to get the legis
to get the electorate to vote for this
stuff as well. So there are a bunch of
convincing, high-paid lobbyists who are
doing that work, sometimes effectively,
sometimes not so effectively. The
absolute black mirror to that is what's
going on now. That even where you have
legislated, even where you have
legalized online gaming, you can clearly
see there is the old marketplace and
industry, the just criminal one that was
always there that basically is being
grafted on top of with legal gambling
now. So you've got one marketplace, two
industries or sectors going there. So
banning online gaming altogether, if you
took the view that we can't control it,
we're going to ban everything. It's nuts
to do that in my view a form of
insanity. You would basically be saying
all of that hundreds of billions of
dollars of revenue, all of the billions
of dollars in tax that could come
through, all of the consumer safety, all
of the child exclusion, all of the
vulnerable community exclusion that
should be taking place. We we're going
to just say we're going to ban it. We
don't want any any share of that money
anymore. We'd rather just say it doesn't
exist because we have a law against it.
What the last three decades are telling
you, you had a bunch of laws allowing or
not allowing online gaming. You had a
bunch of communities who still believe
now in California and Texas that they
have no online gaming. But it's there.
It's there in such a significant nature
in your marketplace, such a significant
nature in your society that a percentage
of average state income is going to this
product. Okay. So, you're looking at the
seduction of American consumers in
products that they demand and desire.
Okay. Across sports betting.
>> Yeah. Yeah. But but but according to
your report, Americans in states with
legal gambling lose more of their income
gambling than people in illegal only
states. Doesn't this mean that
legalization just manufactured a bunch
of new gambling addicts?
>> Legalization has increased the size of
the marketplace is really what's
happened there. Basically, you didn't
replace illegal gambling with legal.
You've just added on top. So, it's been
grafted on top, which means that in
states that have legalized, you simply
have more gambling. But the problem
there is a lion's share of that gambling
is still with illegals. So, the problem
we're having here is there's no perfect
channelization that's ever going to take
place. Okay? You are always taking a
marketplace that was in the shadows and
bringing it into the light. The problem
is you've now got shadows and light in
the marketplace. You don't just have
light. Okay? So to get it back to where
the reasonable level of control should
be, that would be legal only brands and
the only accessible brands, the only
available brands, the only transactable
brands. The illegal ones are pushed to
the margin. And even though you will
constantly need to police this, monitor,
police, enforce, and optimize it for the
future, you will not have 30, 40, 50,
60, 70% control going to illegal actors.
And that's the big problem we have today
is that for all of the money left
behind, all the money that's
profitability to gaming companies, too
much is left with illegal underregulated
operators, not enough is being left with
legal licensed operators and then having
the consequence of going on to be
taxation revenue, going on to be instate
jobs and supply chain benefit. So you're
not seeing that. You're seeing an
overwhelming tide of money leaving
American shores going towards often
organized crime and unregulated brands.
So the big point here is you could
respond to this by simply saying we're
going to ban everything, but it's still
going to be carrying on the same way it
has been for the last three decades.
>> Wouldn't wouldn't you argue that then
the market would get a lot smaller and
the the harm it causes would be a lot
smaller then?
>> So questions about harm and size of the
marketplace, they're not really my
purview to talk on. Okay. So I basically
say to any any client coming to us
whether it's an operator, regulators,
state governments, national governments,
you can have whatever type of
marketplace you want. So California for
example, if you are saying that there's
no online gaming and you have no law for
online gaming, surely it's incumbent
upon you to police that. So we'll
monitor for you so you can police and
enforce effectively. So government like
Saudi Arabia, if you don't want any
online gaming, you need to police and
enforce to make sure that that's the
case then. Okay? Because we know from
our monitoring that we see tens of
millions of connections from a country
like Saudi Arabia to illegal online
gaming every single day. Okay? Why if
there's no online gaming? So having a
law is meaningless unless it has some
kind of enforcement ability, some
application in the society. What you've
been seeing across America is the
assumption that we did not have online
gaming. with the reality that online
gaming was everywhere behind everything.
It's one of the most promoted products
on the internet after pornography. So
this stuff is basically available
everywhere. So you need to understand
that American consumers demanded and
desired this product from the start of
the internet. They still demand and
desire it today. You need the control
and you need to have moved it away from
chaos. But where we are in America today
is fundamentally in a period of chaos
with the online gaming business.
One of the things I've also found very
interesting is that the person founding
funding this research, Derek Webb, he is
a gambling billionaire himself. What is
his motivation in funding this research?
>> Exactly the same as our motivation, I
believe. And I think that's where we met
the kind of the meeting of the minds
between Derek and myself. What what
basically came from. We'd both made
money in online gaming, but we both took
a view that I'd seen something in the
marketplaces where I believed there was
more crime than we were giving it credit
for. So, I'd seen some things personally
and professionally in my career where I
looked at it and went this I had a
period as a consultant probably over a
decade ago now. I had clients coming to
me saying they weren't making any money
in the online gaming business and they
were blaming it all on regulation and
changing audience tastes and generation
Z doesn't like gambling. to all
of those things. Okay. Oz was crying.
just had more control. And that changed
massively during the pandemic. Where
Derek and I met minds on this was
basically we both made money in online
gaming. Derek had a view. I just want to
see a business that's fair and safe for
the future. Okay. So, we both see it.
We're both older men now. Both see it as
legacy. What do we leave behind in this
business that we've been had our hands
on the wheel in in our time. So,
different areas. Derek was obviously
product. I was marketing. We looked at
it and said, "You don't want to have
seen and known something about these
marketplaces and not have made any
difference to it. You want to have
changed it in your time." Both of us
looked at it and thought we both had our
hands on the wheels to some extent
different areas. We wanted to leave
behind a legacy of fair, safe,
contributing online gaming marketplaces.
And we believe that mission's
fundamentally been born out. Our work in
America has pointed to this is how you
achieve a fair, safe and contributing
online gaming marketplace, which you
need to be dealing with the reality of
it. The best reality comes from. Look at
all of the audience, all their activity
all the time. Stop making up excuses for
the business. Stop coming up with dream
scenarios which are based on magical
thinking from things like paid surveys
where you ask a bunch of consumers, "How
much do you lose to illegal gambling?"
If I'm getting paid to answer your
survey, I'm not going to tell you
anything about legal gambling. I just
want to get paid for the survey.
>> Yeah. And imagine the following
situation. You're given unlimited power,
unlimited funds to crack down on illegal
gambling. Where do you start?
>> I would answer this respectfully as it's
not my job to regulate and control all
forms of online gambling. All we are is
the silent machine behind the
marketplace. So GCI and Yulsek are the
mechanics of the marketplace because of
the monitoring and expert human beings
that we have behind our technology to
monitor what's going on out there.
Regulation is an extremely hard job.
Legislation is an extremely hard job.
Neither of which are my or our jobs. We
are there to support legal stakeholders,
regulators, operators, state
governments, national governments to
control and bring back control of the
marketplace to their benefit and society
benefit as well. Because the main thing
here is it's not just the gambling
companies that have been stolen from.
It's not just the state governments and
the community that's been stolen from
with all that tax. It's also the
consumers that have been exploited here.
So consumers have been misled and lied
to and stolen from because behind every
corrupt unlicated gaming brand, there is
stolen customer money that will come
down to it at the end of the day.
Thank you very much, Ismael Vali,
founder of Yieldtech and president of
Gaming Compliance International.
Ismaile, where can people find you?
>> They can find me uh right now. They can
find me online at ismvali.com. They can
find me at gaming compliance.com
and I'll be speaking at the ICE
conference in Barcelona in January as
well about gambling, funnily enough.
>> Thank you very much. us a well. Thank you.
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