Connecticut Will Join Michigan in Sending Cease-and-Desist Letter to Bovada

The Constitution State is set to take major action against unregulated sportsbook operators.

The Connecticut Department of Consumer Protection has announced they will be sending a cease-and-desist letter to Bovada sportsbook this week. The letter will instruct the offshore operator to shutter operations in the state by a certain date or face further legal action. The letter comes less than two weeks after Michigan took similar action against Bovada.

The move was made in order to ensure only regulated operators were available in the New England state. States have been seeing massive tax revenue from the new industry, but gray market operators like Bovada are not subjected to the high tax rates as their regulated rivals. That means the state doesn’t see any money from operators like Bovada, leading to an increased effort to push them out.

While Bovada is not the only offshore sportsbook available in the US, the brand is among the largest in the world. Unlike other gray market operators, they have the financial backing to fight for a place in the US market, which they could flex soon after the latest cease-and-desist letter.

Connecticut has confirmed they will be sending the letter but did not provide a date or how long the operator will have to comply.

While Bovada has agreed to exit other markets in the past, it appears legal sports betting states will all be pushing for similar action. Given that only a handful of states remain without a legal sports betting market, that would lead to Bovada’s US revenue being cut down. While their global presence means the operator won’t close, it will have major financial ramifications.

The threat of losing almost all their US revenue could lead Bovada to take a stand against Connecticut and Michigan. Since the operator is not based in the US, states don’t have much legal recourse to force them out. That means they would need help from the federal government, which could hesitate to pursue legal action.

Given the momentum behind the effort to close the gray market in the US, Bovada may not have much to lose by defying the two most recent requests to shut down. If the Justice Department does take action, the result would be a full exit from the market, which seems almost a guarantee regardless of how they respond to these letters.

Tensions between online sportsbook operators and state regulators have been high, but this issue is one both sides can agree on. Regulated Connecticut sportsbooks have strongly supported legal action against the gray market. Offshore competitors like Bovada are often able to offer better odds and bonuses due to not paying taxes on the revenue generated. Given the amount most regulator sportsbooks are paying states, their demands to stop betting sites like Bovada are continuing to grow.