Explosion of Online Gambling Strains Financial Crime Regulators
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In the first half of the year, U.S. online sports bookmakers created an estimated $2.8 billion in revenue, containing roughly $42.5 billion in bets, according to the American Gaming Association (AGA), a trade group.
However, crimes like money laundering threaten the industry.
As online gambling became more regulated, it dominated the United States; but compliance experts warn of the risks of money laundering and other financial crimes reports the Wall Street Journal.
The U.K. and other jurisdictions have stepped up online gambling enforcement, but the U.S hasn’t added more watchful eyes to the industry yet.
With the explosion of online gambling, money laundering risks and financial crimes persist, which currently see little regulation.
As of August, Washington and 20 states allowed online sports betting, and the association said six states that legalized the practice have yet to launch legal wagering.
Additionally, despite only being legal in six states, digital slot machines generated $2.4 billion in revenue in the first half of 2022, up more than 43% from a record set in 2021, the AGA said.
One example of how an online gambling site can be used to launder money is when two play against each other in a game, obtaining legal winnings.
In July, some of the largest online operators, like DraftKings, an AGA member, expanded their compliance teams.
In August, the UK Gambling Commission announced four fines over online anti-money-laundering failures. One included a £14 million forfeiture, equivalent to $16.4 million, against Entain, which runs several sites.
The company failed to properly assess the risks of its business, allowing a public housing resident to deposit $220,000 over six months.
But in the U.S., it remains unclear which financial crime regulators may step in to regulate online gambling financial crime risks.
James Van Bramer is Associate Editor of The Crime Report.
