U.S. Treasury Department Warns Casinos They Must Combat Illegal Sports Gambling

Last updated on November 2nd, 2018

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The U.S. Treasury Department sent an open letter to American casinos on December 24 asking them to combat illegal sports gambling. The letter, which was made public this week, told casinos, “Increases in sports betting conducted on behalf of third parties are facilitating criminal activity and posing a money laundering risk to the U.S. financial system.”

Global money laundering and sports betting are inexorably linked, reports the International Centre for Sports Security. According to research conducted by the Centre, 80% of all global sports betting is illegally conducted. This betting is invisible to authorities, so it allows a tremendous amount of money laundering to take place. The researchers believe $140 billion is laundered each year through gambling on sports. In the conclusion of the report, the researchers urged governments around the globe to correct a “vulnerability of sports betting to organized crime“.

FinCEN Sends Letter to AGA

The letter was sent by Treasury’s Financial Crimes Enforcement Network. The FinCEN letter was a response to an earlier report by Reuters that American casinos were likely to be asked to tighten security on sports bets, in hopes of stopping third party gambling transactions.

The American Gaming Association (AGA), the trade group for the U.S. casino industry, had asked FinCEN for guidance on practices to stop the money laundering through sports wagers. In response, FinCEN sent its original reply to Geoff Freeman, President of the AGA.

Runners Are Used to Break the Law

FinCEN says that organized crime is using third party individuals called “runners” to place bets at American sportsbooks. These people are thus able to launder tremendous amounts of money for crime units.

The letter to the AGA stated, “In these cases, the intermediaries rarely voluntarily disclose to the casino that a transaction is being conducted on behalf of a third party, thereby disguising the third party’s role in the transaction and obscuring the source of funds used to place the bet. This poses distinct money laundering risks for casinos.”

Bank Secrecy Act Should Be Followed

The letter reminded casinos that they are required under the Bank Secrecy Act to ask betters whether they are making a third party wager. If they are, the casino is required to record that admission, because the wager is considered suspicious.

The Treasury Department believes those gamblers loiter outside or near land-based casinos, often with multiple cellphones or tablet computers. In this way, they get wagering information from their organized crime clients.

Illegal Bookmakers Launder Money

According to the FinCEN report, illegal bookmakers often offset their wagers by betting at a land-based legitimate casino. Online illegal sportsbooks do the same thing. This allows those operators to launder money, helping organized crime get away with all many of other crimes.

Geoff Freeman Gives His Opinion

Geoff Freeman, in discussing the activity with the Treasury Department, made a certain case for the legalization of sports betting throughout the United States. Freeman said that money laundering “is far greater in the vast, unregulated, illegal sports betting market than in the highly regulated, legal gaming industry.”

The president of the AGA continued the point by saying, “While casinos routinely look for suspicious bets at sports books and have worked with law enforcement to identify illegal activity, in some cases leading to criminal convictions, no such oversight exists for the illegal sports betting market.”

Super Bowl Weekend Set to Happen

The Treasury Department’s notification to casinos comes a couple of weeks prior to the biggest betting weekend of the year: Super Bowl week. Each year, over a hundred million dollars in wagers pour into Las Vegas, as American NFL fans wager on the outcome of the year’s biggest American sporting event. Thus, the announcement came shortly before the greatest opportunity all year for organized crime to launder money.