The massive uptake of online gambling activities in the United States since sports betting was legalized in a number of states following a 2018 Supreme Court decision to throw away a ban on sports wagering has raised concerns that criminals may abuse the gambling sector to conduct diverse financial crimes or money laundering.
The Massive Volume of Online Gambling Poses a Greater Risk for Money-Laundering Crimes
The Wall Street Journal reported that various experts on compliance have drawn attention to the flourishing online gambling market, which, however, lacks the necessary strict regulations and controls to protect it from diverse financial crimes.
Since 2018 when the US Supreme Court lifted the ban on sports betting, 21 states have legalized sports wagering, while online casino games have been allowed in 6 states.
The casino industry has always posed a serious risk for money laundering as it uses a lot of cash transactions and provides a greater deal of anonymity to its customers when compared with banks, for example. This makes it an easy target for criminals, who want to turn funds of suspicious origin into legitimate gambling winnings.
With the massive increase in online sports betting activities this risk becomes even greater, especially considering the fact that the US has not been able to enforce adequate controls over online activities just yet.
The US Lacks Adequate Anti-Money Laundering Controls and Compliance Regimes
State and company compliance regimes and compliance teams are not up to the standard necessary to scrutinize and exercise the needed control over such a significant industry.
The American Gaming Association (AGA) has reported that the first six months of 2022 saw online sportsbooks raking in total revenues of $2.8 billion. This corresponds to placed wagers of $42.5 billion. With six more states expected to launch sports betting very soon, these numbers are just going to grow.
The AGA recently updated its anti-money laundering guidance to reflect new laws, technologies and indicators of criminal activity, as well as additional states legalizing sports betting and iGaming in recent years.
Crackdowns on Gambling Providers Abroad Should Serve as an Example to US Regulators
Other countries have been more effective in doubling down on weak anti-money laundering practices, which should serve as an example for the US.
The UK Gambling Commission, for example, imposed a huge fine of £17 million ($20.60 million) on gambling giant Entain Group for failings in regard to social responsibility and anti-money laundering practices.
Another crackdown on Spreadex Limited also resulted in a penalty of £1.36 million ($ 1.6 million) imposed by the UK Gambling Commission due to anti-money laundering breaches.