Editor's note: The illegal market for U.S. sports betting – including offshore websites and your neighborhood bookie – is worth an estimated $150 billion a year.

So the Supreme Court's landmark decision in May caught the attention of everyone from sports bettors to investors.

In today's Masters Series, we're featuring another guest essay from E.B. Tucker – a former Stansberry Research analyst who today heads up our Casey Research affiliate's Strategic Investor advisory. In this essay, E.B. explains why this is a huge opportunity for early investors...

The Supreme Court Is Unleashing a Multibillion-Dollar Industry

By E.B. Tucker, editor, Strategic Investor

Seventeen FBI agents stormed a studio apartment in West Hollywood, California in the middle of the night in the spring of 2013.

It was a show of force suited for an armed fugitive or the boss of a violent crime syndicate. Instead, the only person inside was a good-looking, unarmed woman in her mid-30s.

According to the feds, this raid was a critical piece of an operation designed to flush out dangerous criminals. They say this woman had a connection with unsavory characters spread from Los Angeles to New York.

In reality, she merely hosted a poker game. The invitation-only game was small. Players liked the controlled environment. They didn't have to worry about interruptions or random people sitting down at the table halfway through a tense night.

The woman, Molly Bloom, ended up hosting poker games by sheer chance. After an injury cost her a spot on the U.S. Olympic ski team, she deferred her Harvard Law admission and moved to Los Angeles to take a break.

She took the first job she could find in LA... as an administrative assistant. Her boss quickly realized she was smart, competitive, and capable. Instead of promoting her, he asked if she'd help him host his weekly poker game. She'd have to keep track of the buy-ins and who owed what. But most important, she had to keep the details of the game private. In exchange, the players tipped her at the end of the night.

Soon, Molly made more money in a night from tips than she made all month working in an office. Keep in mind, she wasn't taking a "rake" or a piece of the action like a casino does. Everything stayed on the table. Tips were how the players could make sure they got an invitation to play the next week.

The game went from a private home to a nightclub basement to the presidential suite at the Four Seasons. The buy-in went from a few thousand dollars to as high as $250,000.

High rollers and celebrities like Alex Rodriguez, Leonardo DiCaprio, and Tobey Maguire attended her poker games.

Tips grew, too. At her peak, Molly made upwards of $4 million in a year.

The flow of cash eventually attracted the Russian mob. One day in 2011, Molly took a beating from two goons. One put the barrel of a revolver in her mouth, while the other took her cash and jewelry.

Months later, the FBI raided one of her games.

Through it all, Molly didn't believe she was doing anything wrong...

After all, she filed taxes, kept track of expenses, and even formed a company years prior called Molly Bloom, Inc. The whole operation was above-board.

At least, she thought it was...

Molly got advice from a lawyer when she started hosting the games. She found out that it's not illegal to play poker. It's not even illegal to win a lot of money. It is illegal to take a rake, like a casino has license to do. It's also illegal to compel someone to pay when they lose. Facilitating payment of the loss is also illegal, depending on the interpretation of the law. While confusing, she did her best to stay on the right side of the law.

What she didn't realize until it was too late was that the millions of pages of federal law in place today are mostly gray areas.

And in 2013, everything finally came crashing down.

After the FBI raid, an IRS lien, civil asset forfeiture, and an 84-page federal indictment, Molly realized that she and the feds had a difference of opinion.

On April 16, 2013, Molly was arrested and charged along with 33 others as part of a $100 million money-laundering and illegal sports-gambling operation.

She spent the next year trying to defend herself against the federal indictment. It was hardly a fair fight. The government froze Molly's assets, making it nearly impossible for her to even hire a defense attorney. Meanwhile, it deployed an army of prosecutors on the case.

Out of options, Molly pled guilty to the federal charges in 2014, partly to avoid having to disclose the names and details of her former players in a plea deal. The federal judge hearing the case gave her 200 hours of community service and a $200,000 fine. While he acknowledged that there was some wrongdoing, he did admit that the federal government should be chasing more serious criminals.

Gray-Area Laws Help Criminals

The feds like gray areas because they can make any case they need to. It allows them to crack down selectively when it suits their agendas. If laws were black and white, it would be easy to avoid trouble. That would take power away from the feds. It's impossible to fight an 84-page indictment when you can't even hire a lawyer because the government seized everything you own and restricted your movement.

In 2011, the feds had it out for online gaming. You might remember news of offshore companies setting up gambling sites in the early days of the Internet. Now, they were under attack.

As always, the crackdown comes in the name of safety. Nobody likes the thought of dangerous, degenerate gamblers lurking in the shadows of the Internet. The public always foolishly buys into a government "war" on common vices.

The public never stops to look back at the results of all these government wars on vices. Licensed gambling operations still flourish. Dad can lose his entire paycheck if he has too much to drink at a Las Vegas trade show and gets lost on his way to the hotel room.

Worse yet, not everyone has a weekend to spare traveling to Vegas every time they want to gamble. With the threat of federal legal action, one misstep means you're a criminal... as was the case with Molly Bloom.

The reality of a federal war on anything is that it makes things worse. Instead of walking into a licensed establishment, people have to go looking on the fringe of society – or worse, the underworld. Goons and thugs make a fortune while the feds keep profit margins sky-high with the threat of legal action.

However, when the government decides to give up one of its "wars" on any vice, it sets free a billion-dollar industry.

Occasionally, it figures out that taxing and regulating the vice is more lucrative than employing tens of thousands of agents and prosecutors to attack it. After all, the government's enforcers are just goons with badges.

As I wrote yesterday...

This is exactly the type of sea change we're looking for. The government deciding it will lay down arms and allow licensed, legal operating of anything means a chance to profit.

And right now, we see massive opportunity in legal online sports betting...

Big Profits From Licensed, Legal Gaming

The New York Times estimates that the illegal market for sports betting in the U.S. is as much as $150 billion a year. Forbes estimates the illicit take from online sports-betting sites is around $3 billion.

While those are big numbers, they're likely still accurate. Right now, almost all of that revenue flows through unsavory hands. The truth is that nobody knows what legalized sports betting would be worth.

People love to bet on sports in the U.S. Unless you're physically in Las Vegas or at a casino licensed for sports betting, it's illegal. That means a massive percentage of working-class, grown men are technically criminals. It's hard to take the federal government seriously when you examine its tactics.

We think that's all about to change. If we're right, it means pro-football fans will soon place bets using their smartphones without having to settle up later with a shadowy bookie.

In May, the U.S. Supreme Court heard an argument challenging a 1992 federal law banning sports betting. Like most federal laws, this one accomplished the exact opposite of what its name implied.

The Professional and Amateur Sports Protection Act did nothing to safeguard the integrity of competitive sports. After all, sports betting on every imaginable outcome was still legal in licensed venues.

The Supreme Court case argued that the law was unconstitutional because it limited each state's right to legislate gaming laws. In a 6-to-3 decision, the court agreed.

It's important to understand that this ruling does not make sports betting legal. What it does is give each state the power to license, regulate, and tax the industry within its borders.

As sports betting comes out of the shadows and into the mainstream, we see a huge profit opportunity. We've already found several companies positioned to benefit, and now is the perfect time to get in.

Regards,

E.B. Tucker

Editor's note: E.B. says that February 4, 2019, will be one of the most profitable days in stock market history for certain investors... He predicts that more than $4 billion will move into the sports-betting industry on that day, and he has identified three stocks in particular that could return three, five, or even 10 times your money. Get the details here.