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The DOJ recently announced a settlement with WU, in which the money services company forfeited $586 million. The reason: The company admitted to “criminal violations including willfully failing to maintain an effective anti-money laundering (AML) program and aiding and abetting wire fraud,” per a DOJ press release.
More from the DOJ:
“As this case shows, wiring money can be the fastest way to send it – directly into the pockets of criminals and scam artists,” said Acting Assistant Attorney General Bitkower. “Western Union is now paying the price for placing profits ahead of its own customers. Together with our colleagues, the Criminal Division will both hold to account those who facilitate fraud and abuse of vulnerable populations, and also work to recoup losses and compensate victims.”
The DOJ cited illegal gambling and sports betting as part of the settlement. More from Bitkower:
“Western Union’s failure to implement proper controls and discipline agents that violated compliances policies enabled the proliferation of illegal gambling, money laundering and fraud-related schemes.
What appears to be a very specific case of illegal sports betting was also a part of the case:
Finally, Western Union has been on notice since at least December 1997, that individuals use its money transfer system to send illegal gambling transactions from Florida to offshore sportsbooks. Western Union knew that gambling transactions presented a heightened risk of money laundering and that through at least 2012, certain procedures it implemented were not effective at limiting transactions with characteristics indicative of illegal gaming from the United States to other countries.
Stopping offshore bookies and illegal gambling operations is difficult for the federal government to do. Right now, Americans can easily play online poker, place sports wagers, and gamble at online casinos at a variety of illegally operating websites and apps.
A survey of busts involving sports betting just during the first half of 2016 shows how difficult it is for law enforcement to stay ahead of illegal bookmakers and casinos. Prohibition simply doesn’t work. There will always be someone to take the bets, and someone will always process the payments associated with them.
The thing is, the black market for offshore sportsbooks, in particular, exists because there is almost no regulated alternative in the US. Nevada is the only jurisdiction in which federal law allows single-game wagering. Beyond that, Americans wanting action on sports must either turn to daily fantasy sports or illegal, offshore books.
New Jersey has continually tried to push back against the federal law — PASPA — that prevents states from legalizing and regulating sports betting. The Supreme Court is considering whether to hear an appeal in the NJ sports betting case.
The professional leagues — the plaintiffs in that case — apparently believe the status quo of a massive black market estimated in the hundreds of billions of dollars in handle is better than the transparency that comes with regulation. (The exception is the NBA and Commissioner Adam Silver, who advocates for federal regulation despite the fact that his league remains in opposition to New Jersey.)
Regulated markets certainly wouldn’t get rid of all illegal sports betting being done by Americans from US soil. But it would be a good start to stopping the flow of money offshore.