Opinion: Could Gambling Fraud Like UK Case Happen In Limit-Heavy US Market?

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If you happen not to read local papers from the UK. you might have missed a story about a 40-year-old man from Essex who was sentenced to five years in prison for conspiracy to commit gambling fraud against Bet365.

While the nascent US sports betting market has been taking a beating in the press over advertising and NFL players violating league gambling rules, there is also likely growing anxiety from shareholders over when the market will turn profitable. As online casino pushes seem to have stalled out, there are other issues out there threatening the industry’s health.

The tight margins that the sports betting industry operates on mean that an unexpected cost can substantially damage a company’s bottom line. While there have been a few fairly well-publicized wrist slaps (or taps, depending on who you ask) over proxy betting schemes that were not detected when they should have been, in the United States we have not seen a highly publicized event surrounding customers circumventing know-your-customer (KYC) regulations in order to open or operate multiple accounts to circumvent limitations.

As we continue to hear stories about bettors in the US being limited, it seems like at least a possibility that a story will come to light that some bettors have been operating multiple accounts with a single operator to get around limits being placed on them.

Hullabaloo in UK gambling fraud case

According to a story by Sophie England in the Echo, in April, a 40-year-old from Essex in England was sentenced to five years in prison for “conspiracy to commit fraud by false representation” for a purported scheme involving Bet365.

The court proceeding stems from allegations that the accused was part of a group that circumvented restrictions placed on a single account by opening “over 1,000 online betting accounts.” The Crown prosecutors estimated that the accused received more than £236,000 over the course of the gambling fraud scheme that dates to 2008.

The accused reportedly recruited individuals to give him the information necessary to open accounts in their name, which allowed him to receive new account bonuses and avoid the restrictions that come with operating a single account. He stood trial with several co-defendants: one who was found not guilty and one who pled guilty to conspiracy to commit fraud against Santander. All defendants, however, were acquitted of money laundering.

The theory that was used by the prosecution was that because every sports betting operator’s terms of service prohibit individuals from operating multiple accounts. Operating multiple accounts by using other individuals’ credentials constitutes an effort to defraud or deceive the operator.

Limits, limits everywhere

One of the biggest complaints on gambling Twitter comes from bettors limited by sportsbooks. The issue has become so prominent, the few companies that post universal limits for all bettors have reps online that frequently advertise this fact.

There is nothing in regulations that prohibits a sportsbook from limiting certain customers in the US. Nonetheless, the practice has become so extreme in some cases, it appears that the regulated market leaves some bettors with seemingly no option to get down larger and/or more wagers.

Right or wrong, in the current state of the US sports betting industry, it is a sportsbook’s prerogative to set limits on any individual bettor that they see fit. Is it a good business practice? Time will tell. Is it good for the regulated market? Probably not.

Taking away regulated options from high-volume bettors is unlikely to drive them to pack their money away and go find something else to spend it on. They will just find an unregulated or illegal sportsbook that will take their money.

Two wrongs do not make a right

While there is certainly an argument to be made that non-standard limiting is unfair, bad for business, etc., that does not permit bettors to circumvent terms of service and state regulations, as well as state and perhaps federal law.

No regulated sportsbook’s terms of service permit an individual to have more than one account. Allowing the use of another person’s account as a mask to have multiple accounts would effectively make the prohibition meaningless.

The regulatory system is set up such that customers need to enter required KYC information so that it can be verified. Attempting to circumvent that system is likely legally problematic. This follows similar logic as to why if you walk into the bank and try to wire money that someone else gave you, you are going to be answering a lot of questions because money-handling businesses need to know who you are.

Laws, laws, laws … and gambling fraud

The simple answer to the question of whether we could see a prosecution on a gambling fraud-based theory for operating multiple sports betting accounts in order to accumulate multiple bonuses and circumvent limits is yes.

At the state level, there are going to be different laws that could be applicable, but at the federal level, the Wire Fraud statute has an incredibly broad scope (perhaps as broad in terms of scope of activity as any federal criminal law.) Acts to deceive involving electronic communications such as the type of activity that took place in the UK appear to fall within the reach of the statute.

It is ultimately not known if we will see a scandal like the one from the UK, but as time continues to pass and companies continue to strive to do anything to reach profitability, which at least for some seems to include a strategy of limiting bettors, it seems that a similar type story could eventually break in the US.