Money Laundering Ruling to Impact Online Gambling?

by Mira Patel, News Staff Writer

June 25, 2008

Money laundering and casino gambling have long been associated with one another. In the early days of Las Vegas when the mob essentially ran everything, money laundering was simply a part of the way things operated. These days, with organized crime largely rooted out of gambling activities, money laundering is something more likely to be prevented, rather than uncovered.

In the world of online gambling, you wouldn't be far off to assume that money laundering does indeed take place, especially amongst online sports betting operations taking and transferring funds from players not protected by regulatory legislation. In the U.S., where regulation is not endorsed, you would think that money laundering is a problem. And while that certainly is the case, many of these operators are fortunately regulated elsewhere and still abide by strict licensing regulations.

In other words, U.S. facing online sportsbooks often launder money to get around U.S. law, but still abide by their licensing requirements, which in effect, protects the bettors from unfair treatment. For U.S. bettors, however, they have no recourse if something misfortunate befalls them, which is precisely why it's important U.S. citizens only gamble at reputable online establishments accepting U.S. funds - not just any online casino claiming to accept U.S. bettors.

As you can see, money laundering in this case (online casinos and sportsbooks circumventing U.S. financial roadblocks) may not necessarily be used to fund criminal activities, which is often the stigma attached to the term. However, a recent U.S. Supreme Court ruling (which brings me to the point of this article), may just help to erase that stigma.

In the Cuellar v. United States case, the Supreme Court has reversed a money laundering decision stating that merely smuggling concealed money does not equate into "money laundering". In order for the smuggling to be considered money laundering, there must be proof of an attempt to disguise the financial transaction so that it appears to be involved in a legitimate and legal enterprise. Whether this helps or hurts online casinos and sportsbooks off the hook, remains to be seen. It is certain, however, the US Department of Justice will have to take a closer look on how it goes about collecting evidence and pursuing its money laundering prosecutions in the future.

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