Money laundering is one of the biggest fears governments have with internet gambling casinos. They (as in the governments) are afraid that internet casinos are taking illegal and dirty money (from things like drugs and such) and "cleaning" them by taking the money, depositing it in the casino, and losing it. Thus the money would be part of the profit of the casino, rather than from an unknown source, hence it would be clean. I never really understood what money laundering was until last week when I was at a friends house discussing it with her husband (who was fascinated with the fact that I managed a group of online gambling casinos.) It was this same fear, actually I'm not sure fear is the right word, distrust perhaps would be better. It was this same distrust that led to the 1961 Wire Act, where all interstate phone betting was stopped, as it was a known racketeering strategy to launder money. Land-based casinos were another useful tool of the underworld to clean their money for legal enterprise (such as buying real estate). As I mentioned, money laundering and gambling was the topic of discussion last week at my friend's house. Now, I can understand the United States government's paranoia regarding internet gambling. However, her husband gave an example of a falafel restaurant near where they used to live in London. Apparently this falafel place was always empty and one day he went in to order and they were out of pita. For those of you who don't know, pita is essential to falafel (it’s the bread part – the falafel goes inside of it) without pita you don't have falafel. They didn't even have an alternative. His comment was that the place was obviously a cover for laundering money. If a place like this can launder money so easily (assuming that he was correct, and as the place is still there we're guessing he is) then why go to the cost and effort of starting an internet gaming casino? To start an online gambling casino with the most basic of software costs over one hundred thousand dollars. You need to hire a regular staff to maintain the site and the money and customer service and net people. This isn't a small operation. This is big. Typically this is big and profitable, so why would they go and potentially screw up their chances at making it bigger by doing something illegal? Furthermore, if the internet casino industry was just a cover for mafia organizations to clean their money then why would they try to legitimize the business with the United States? Wouldn't they simply not care? Why would money laundering ruin their chances of making it bigger? The United States has the bulk of players for most online gambling establishments; however, running an internet casino is illegal from the United States, while depositing and playing are allowed. The few states which have depositing and playing in online casinos as illegal don't actually follow through on their own legislation, making it redundant and impotent. As most internet casinos are hugely profitable organizations they would want to do their best to be legitimized in the United States in order to increase their customer base and their net profits. This is why organizations like eCogra have become the norm in the online casino world. The industry is self regulating in order to prove their legitimacy as businesses. Part of this self regulation is strict self discipline over finances. If the United States were to allow internet gambling and regulate the industry they would have free reign to advertise and recruit players just as any other business has. Of course, their recruiting would have to change for players to be over 21 as that is the legal age for most areas of the US (rather than 18) but I doubt any online casino would have an argument with that. Not even Jon Kyle, my favorite Republican Senator from Arizona, mentions the money laundering issue when arguing about internet gambling. His issues with gambling are morality based. Most likely he takes the morality stance as he has no real proof or argument about the speculation of money laundering in the industry. The real pity is that if the internet gambling casino industry as a whole (this means sports books and poker rooms as well) were to become regulated in the United States as legal legitimate businesses they could help the United States government fight fraud and crime. How's that? Well one of the biggest problems in an internet casino is the chargeback and fraud rate in their deposits. Finding fraud and eliminating it from the internet gambling industry as a whole would help the whole credit world at large. Back in the day when I managed a group of internet casinos I was also in charge of the fraud department. It was a huge task to check every single deposit and withdrawal request made into the casino. Quite often I found someone who was able to deposit that shouldn't have been able to, and was able to keep a chargeback from happening. The problem was, I had no one to report my findings to. As the credit card companies weren't interested in our information as we aren't recognized as businesses in the United States, and the FBI couldn't use our information as it was from an online casino my information went no where. This helped the bad guys (who are not the internet casino people) win. They knew they had us between a rock and a hard place for fighting them. It was frustrating, because I knew we weren't the bad guys, yet I couldn't do anything to actually stop the group I knew who were (the people depositing with obviously stolen credit cards). I had their IP Addresses, the credit card numbers which should have been reported and cancelled, and information on the thieves themselves. All of this information was for naught, as no one would listen. Posted on: November 28, 2005
Back to November 2005's archive |
||||||||||||
|
Del.icio.us
Digg
Google
Spurl
Furl
Simpy
Y! MyWeb