Online gambling "could" be used to launder money, Let's review this...

[MiltonFriedman]

One of the arguments cropping up in the legislative discussions and Congressional replies posted in this forum is the proposition that "Online gambling could be used to launder money". The issue will NOT go away, and needs to be reviewed and discussed with lawmakers.

1. Online gambling has not BEEN used to launder money, at least the FBI has never claimed to have evidence of use.

2.Yes, the BetUS and BetOnSports criminal cases talk about "laundering money" in the sense that the money bet is bet surreptiously by the players. That is the players' own money and the parties to the betting transaction know what is going on. There is no "terrorist or drug money laundering" going on in such cases.

3. Money laundering, in the sense that poker players disguise transactions by exchanging funds on one US friendly-site for funds elsewhere, is a fact, the volume of which is unknown.

4. Basically, online gambling offers only a "potential" for laundering money, just like the restaurant industry, ebay auctions, paypal, and other entities. None of these other entities or businesses are outlawed because of a "potential" for criminal abuse.

4. For example, Rudy Guliani made his early mark in New York as a prosecutor of drug dealers using the widespread NY pizza industry to facilitate sales and distribution. Did anyone suggest that pizza restaurants be outlawed as a result ? (Would Rudi be a candidate for elected office today if he had done so after becoming Mayor ?)

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4. Basically, online gambling offers only a "potential" for laundering money, just like the restaurant industry, ebay auctions, paypal, and other entities. None of these other entities or businesses are outlawed because of a "potential" for criminal abuse.

4. For example, Rudy Guliani made his early mark in New York as a prosecutor of drug dealers using the widespread NY pizza industry to facilitate sales and distribution. Did anyone suggest that pizza restaurants be outlawed as a result ? (Would Rudi be a candidate for elected office today if he had done so after becoming Mayor ?)

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It would be easy for Terrorists to transfer money using fake (or even real) Ebay transactions as a means to legetimize money transfers. Since it "could" happen Ebay should be shut down.

I think we should take it one step further just to be safe and eliminate all Italian restaurants not just pizza parlors.

Also, males are responsible for over 90% of violent crimes, therefore eliminated men would reduce violent crime by over 90%.

[Grasshopp3r]

Are there any common elements that have been identified with terrorists? It surprises me, but most terrorists are highly educated, therefore, we should outlaw universities.

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Are there any common elements that have been identified with terrorists? It surprises me, but most terrorists are highly educated, therefore, we should outlaw universities.

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No doubt!!!!!!!!!!!!!!!!!!!!!!!!

[CountingMyOuts]

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4. Basically, online gambling offers only a "potential" for laundering money, just like the restaurant industry, ebay auctions, paypal, and other entities. None of these other entities or businesses are outlawed because of a "potential" for criminal abuse.

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The money laundering argument they use is so weak. I guess we should just shut down every business, pack up and go home since almost every business could be used for money laundering...

[CPOSteve]

Milton,

If I had to guess, I would say that the argument would go something like this. E-Bay, PayPal and the local pizza joint are all American businesses. This makes their finances more transparent than those of an off-shore gambling business. Ergo, it would be easier to launder money through the latter than the former.

That being said, I don't buy it. I also don't think we're going to be able to prove the negative. Lastly, and most importantly, it appears to be political sleight of hand. The argument that "gambling is a sin" only appeals to a small slice of the population. Same for the "we have to keep people from harming themselves." But if you float terrorism out there, well everybody's against that.

The reason why it works is simple, the issue of on-line gambling isn't important enough for most people to worry about. The vast majority of the population (and Congressmen I would wager) really don't know the issues because they can't be bothered enough to learn. When the audience is disinterested then you can get away with a red herring argument like this one, and "convince" the people who aren't paying attention.

[Uglyowl]

Our opponents began with the terrorist theme so here goes. After 09/11 everyone in the country knew that planes could be used to kill people and attack America. Millions of people though used planes to get from point A to point B and nothing else. Because this potential existed they didn't shut down the airline industry, but made it safer and harder to use it for harmful purposes.

With that being said, if Congress is concerned about that, then online gambling should be monitored by them and made safer and harder for it to be used for harmful purposes, it is that simple.

Further, if it is illegal/legal in the U.S., it effects the potential for online gambling to be used for these purposes zero! Online gambling companies will still exist outside the U.S. regardless.

[Unabridged]

gambling sites could do a large amount of money laundering. some people on the inside of the site could easily run a large operation, all they would have to do is approve a few player-to-player transactions, not investigate some chip dumping, and/or approve a few cashouts.

businesses with lots of volume of money going in and out are perfect for this. add to the fact they are already considered gray area by a lot of countries, that they operate transnationally with little oversite, and that laundering money wouldn't hurt affect their business at all(in fact it would generate rake and it would increase volume & number of players i.e. things that look good to shareholders).

id be surprised if money laundering involving employees hasnt occured at every site. even if employees were caught and fired, nothing would every be said about it and no one prosecuted because the site would never want that to get out. i wouldnt even be surprised if a few sites had money laundering being facilitated by high up executives/owners.

[MiltonFriedman]

"gambling sites could do a large amount of money laundering..."

"id be surprised if money laundering involving employees hasnt occured at every site..."

"i wouldnt even be surprised if a few sites had money laundering being facilitated by high up executives/owners."

Maybe, but there is zero evidence that this has happened.

Keep in mind that the gaming company funds need to move through the same banking system, especially in the US, which has in place "Know-your-customer" rules.

I would be surprised if it HAS, because there are many easier ways to DIRECTLY dump money, through places like ebay for example, which "legitimize" transactions. A gambling site takes in deposits and has to act as a financial intermediary. By contrast, ebay would provide a "legitimate" cover for a direct transfer of funds.

That you would be "surprised" if something collateral hadn't happened is no basis for prohibiting an underlying activity, rather than regulating it or bringing it onshore.

Not only is there no fire, there is no smoke.

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i dont want to prohibit anything. i dont think the governments should be tracking our money.

how much does someone on a pokersite fraud team make a year? <50k? i have no idea, but im sure its <$100k even at a large site. when you have someone making so little compared to the money they are controlling, someone will be taking advantage.

there would be no smoke at all, because the site would never let anything get out for fear of getting invesitgated or losing business. im sure major sites have caught employees looking at holecards and trying to profit from it. again you would never hear anything about it. because even the best possible story (we caught the guy, returned monies, and sent him to prison) is very bad news for them.

[TheEngineer]

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i dont want to prohibit anything. i dont think the governments should be tracking our money.

how much does someone on a pokersite fraud team make a year? <50k? i have no idea, but im sure its <$100k even at a large site. when you have someone making so little compared to the money they are controlling, someone will be taking advantage.

there would be no smoke at all, because the site would never let anything get out for fear of getting invesitgated or losing business. im sure major sites have caught employees looking at holecards and trying to profit from it. again you would never hear anything about it. because even the best possible story (we caught the guy, returned monies, and sent him to prison) is very bad news for them.

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Again, your comments are speculation. In fact, that's why congressmen keep listing this as a concern. We really have no way to disprove a negative, but the fact is that these sites, unlike pizza parlors, eBay, EF Hutton, and exotic car dealerships, have not been shown to have facilitated laundering of ill-gotten gains. Simple as that.

[MiltonFriedman]

"im sure major sites have caught employees looking at holecards and trying to profit from it. again you would never hear anything about it. "

1. Planet poker had their rng cracked and fessed up

2A. Popular Poker. The software developers reportedly put in a back door for this purpose.

2B I believe that the Manager of Popular Poker was subsequently reviewed by the Nevada Gaming Commission for a position as a GM for a hotel casino. ..... He reportedly was deemed suitable, so long as he divested himself of his interest in the online site.

There should be threads on this.

[AzDesertRat]

There has been no confirmed proof---they are just allegations used as scare tactics in an attempt to move the legislation forward. Fear is a bigger motivator than love or hate.

[MiltonFriedman]

Both of what I discuss were admitted by the operators themselves.....

The point is that is ignorant to state that no site would fess up to cheating by employees or contractors or RNG flaws.

The secondary point is that the Nevada gaming authorities also passed on the suitability of the manager of one of these sites to later become GM for a HotelCasino in Las Vegas.

[AzDesertRat]

I have dealt with fraud and it is a legitimate concern with so much cash flowing through these operators. Internal controls have to be set up to prevent such incidents.

Am I saying that the thread of money laundering will be gone? Of course not--all I am saying is any that does happen, because it will, will be negligible. It is a similar to how banks are set up--they don't prevent all money laundering, but they can look for triggers that suggest it when it becomes a certain size.

ftr, it is easy to launder money using the current system without getting caught too--most people are either too stupid or unaware on what to look for, however

[Grasshopp3r]

Money laundering at a poker site is ineffective as every transaction is recorded. True money laundering is cash based and can not be traced to anyone.

[BluffTHIS!]

Milton,

I agree 100% with you that this argument is bogus and a red herring. But only insofar as they connect money laundering with terrorism or other crime, as there is some not just potential, but likelihood of small time *tax evasion*, not laundering, which I think they also mean.

grasshopper above said:

"Money laundering at a poker site is ineffective as every transaction is recorded. True money laundering is cash based and can not be traced to anyone."

But that really isn't true. It is not only whether a transaction produces a paper trail, but also whether that paper trail can be had by the gov't. Which it can't in many cases where they lack the means to coerce the owners of privately held foreign based sites.

But what is also an important factor here is the scale of *potential* money laundering. The simple fact is that for very big sums, one is indeed going to have to use US banks and generate a findable trail. While there might be posters here who make much more modest sums and got it to the B&M world via the neteller ATM card with the assumption (wrong now we know) that it could never be traced, those sums for any one person, or even in aggregate are fairly small, and again that is tax evasion and not strictly money laundering.

Furthermore what those bogus arguments don't take account of, is that even if getting say 10 or 20K to a terrorist or criminal is worthwhile from the perspective of those persons, then with the policies that the sites have in place, they simply can't transfer through them, but instead will be required to play/wager a substantial amount. And to prove that all one has to do is read the zoo and the crybaby threads from the chip dumpers who have had their accounts frozen.

The image of the terrorist depositing money from abroad into a poker or even sports betting account, and wagering X amount to be able to just cash out the rest if there is any, is just ludicrous. They would be better off robbing a convenient store to get their funding.

[AzDesertRat]

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Money laundering at a poker site is ineffective as every transaction is recorded. True money laundering is cash based and can not be traced to anyone.

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While that is true, running money through one account and creating fictitious accounts to "clean" the money is an effective way of getting around it. You can do this internationally too. Each account could be tied into different bank accounts which could also be closed after the transaction is done.

That being said, it is not that easy to do on a large scale. It would be much easier at a B&M casino. The money laundering charge is just a scare tactic. I would ask for REAL proof from the FBI not hearsay from someone with an agenda.

[Legislurker]

The big problem is that it sounds plausible to the uninformed and uncaring, which is most voters. They don't have to back the accusation up with facts because no other Congressman or major news outlet woudl risk the egg on their face to call them outright liars(which they are). Its just an awesome soundbyte that we have to deal with.

[Flacks]

It will be interesting to see how quickly the money laundering issue disappears one the US casinos get their sites made legal and up and running.

[Moneyline]

I think the best way to approach the money laundering argument is to not only emphasize that there hasn't been a single reported case of this actually happening, but also emphasize that this is a case of politicians playing the terrorism card to try to gain support for an unrelated issue. Many people feel the government used terrorism as an excuse to enact bad policy (Iraq, Patriot Act, etc.) and therefore calling out politicians for manipulating the terrorism issue should be an effective rhetorical device.

[AzDesertRat]

[ QUOTE ]
I think the best way to approach the money laundering argument is to not only emphasize that there hasn't been a single reported case of this actually happening, but also emphasize that this is a case of politicians playing the terrorism card to try to gain support for an unrelated issue. Many people feel the government used terrorism as an excuse to enact bad policy (Iraq, Patriot Act, etc.) and therefore calling out politicians for manipulating the terrorism issue should be an effective rhetorical device.

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It's actually simple---demand documented evidence, not hearsay by saying it "could be used". Also ask why regulation could not have been an option to quell those fears instead of prohibition. Let them defend their position instead of you defending yours.

Politicians are stupid--the problem is that the people voting for them are stupider. I can see through a politician because I know the difference between what a politician says and what he means. I wish more people would make that distinction also. Hint: whenever any of them preface a statement by saying "the american people"--the rest of their statement is BS or they want to push their agenda (actually both in most cases)

[jackaaron]

How did they ever convince anyone to disallow the acceptance of US players based on the threat of terrorism?

By disallowing US player deposits, do they actually end the transfer of funds by terrorists? lol

Obviously not...terrorists, if they are using UB, Stars, etc. to xfer money (I actually laughed when I wrote that) are doing so in foreign countries where our law doesn't even matter.

It seems to me that any politician that says this again could easily be silenced by another politician if said politician just had a little bit of common sense.

Of course, I could be missing something (and it wouldn't be the first time).

[MiltonFriedman]

That we have to deal with it is the point of this thread.

The counters seem to be:

1. The so-called "potential" is already covered by US banking rules. Someone in the US, using a US bank account to transfer money for online poker, is already covered by KnowYourCustomer protections for US Banks.

2. Millions of US citizens want to play poker online.

3. If moneylaundering was a real concern, then it would be better policy to regulate money transfers, and let millions of US citizens play online like they want to, with their own money.

[Emperor]

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i dont want to prohibit anything. i dont think the governments should be tracking our money.

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I agree wholeheartedly. Replace the convoluted IRS with a National Sales Tax and the whole money laundering issue goes away.

[Grasshopp3r]

There are many competing non-government currencies out there. If and when one of them gets established, the feds will have no control, anyway.