“There is no credible evidence of money laundering associated with online gambling. Land-based gambling in venues such as casinos and race tracks is more susceptible to money laundering than online gambling. United States government studies have concluded that it is unlikely that online gambling can be used for money laundering because there are no anonymous cash transactions in an online gambling transaction, unlike in land-based casinos where money laundering has been, continues to be, a concern.

While United States officials frequently contend that online casinos and sportsbooks are susceptible to money laundering, they have never cited an actual example of such activity.    If money laundering in online gambling was as apparent as these officials claim, then, by their logic, any foreign business could be shut down for money laundering on mere allegations of such activity.  There is no money laundering in the online gambling industry.  The United States has issued official government studies concluding that online gambling is not a likely or accessible avenue for money laundering because the identities of the gamblers are known, the financial transactions between the bettors and operators are all in an electronic format, and all of the wagering is recorded.    By contrast, land-based casinos in the United States have had documented incidents of actual money laundering due to the large volume of anonymous cash transactions taking place at casinos.   Within the last two years, money laundering scandals have erupted in the United States land-based casino industry, such as the case of large casinos failing to complete anti-money laundering forms for winning customers and a criminal syndicate from Japan laundering money through Nevada casinos.  The United States government alleged that a group of alleged Muslim terrorists in Buffalo, New York were laundering money through a local casino.

To the extent there is a legitimate concern about money laundering in the gambling industry, the concern could be resolved by encouraging the use of credit cards and other secure forms of electronic payments for online gambling and regulation of the online gambling industry.   That way, there would be a regulated system that ensured an “electronic footprint” in all gambling transactions.   This would eliminate any remote risk of money laundering in the online gambling industry.

United States General Accounting Office, Money Laundering: Rapid Growth of Casinos Makes Them Vulnerable, GAO/GGD-96-28 (4 January 1996)

United States General Accounting Office, Money Laundering: Extent of Money Laundering through Credit Cards is Unknown; GAO-02-670  (22 July 2002).    This report states:  “The extent to which money laundering through credit cards may be occurring is unknown. Bank regulators, credit card industry representatives, and law enforcement officials we interviewed generally agreed that credit card accounts were not likely to be used in the initial stage of money laundering when illicit cash is first placed into the financial system, because the industry generally restricts cash payments. Bank regulators and credit card industry representatives we interviewed acknowledged that credit card accounts might be used in the layering or integration stages of money laundering. For example, by using illicit funds already placed in a bank account to pay a credit card bill for goods purchased, a money launderer has integrated his illicit funds into the financial system. Most law enforcement officials we met with were unable to cite any specific cases of credit card–facilitated money laundering in U.S.–based financial institutions. Further, a FinCEN analysis of its database of SARs filed by U.S.-based financial institutions revealed very little evidence of potential money laundering through credit cards.”

United States General Accounting Office, Internet Gambling:  An Overview of the Issues, GAO-03-89 (2 December 2002). With respect to money laundering, this report states:  “Representatives of law enforcement agencies, regulatory bodies,  and the credit card and gaming industries expressed mixed views regarding the vulnerability of Internet gambling to money laundering. Law enforcement officials said they believed that  Internet gambling could potentially be a powerful vehicle for laundering criminal proceeds at the relatively obscure layering stage of money laundering . . . Law enforcement officials acknowledged the lack of adjudicated cases involving money laundering through Internet gambling sites but cited what they believed to be contributing factors, including the lack of any industry regulations or oversight. Banking and gaming regulatory officials did not view Internet gambling as being particularly susceptible to money laundering, especially when credit cards, which create a transaction record and are subject to relatively low transaction limits, are used for payment. Likewise, credit card and gaming industry officials did not believe Internet gambling posed any particular risks in terms of money laundering. Gaming industry officials did not believe that Internet gambling was any more or less susceptible to money laundering than other types of electronic commerce and pointed out that, in their view, the financial industry, which is responsible for the payments system, is better suited to monitoring for suspicious activity in the area than the gaming industry itself.” (emphasis supplied)

American Gaming Association, Fact Sheet: Money Laundering [http://www.americangaming.org/Industry/factsheets/issues_detail.cfv?id=3].

CasinoWatch.Org [Anti-Gambling Advocacy Group], “Money Laundering in Casinos.”  This site documents a number of money laundering incidents in United States land-based casinos.   [http://www.casinowatch.org/crime/money_laundering.html].