US Sen. Mark Warner (D-Va.) added his name to the small list of elected officials who support a federal online gambling ban, in a letter sent to Attorney General Jeff Sessions on July 5.
According to The Hill, Warner wrote the following in his letter to Sessions: Online gambling sites, “are especially fertile platforms for the facilitation of money laundering, collusion and other illegal activities.”
Those words, no matter how ominous, have no basis in fact.
Return to sender for online gambling letter
Warner’s statements about money laundering and the other “dangers” of online gambling are far-fetched. But by addressing the letter to Sessions, he shows a level of ignorance on the topic. Sessions publicly recused himself from the issue of online gambling less than a week before Warner sent his letter.
Sessions’ recusal was predicated on his hiring of attorney Charles Cooper to represent him in the ongoing probe into Russia’s meddling in the US presidential election. Cooper has also been hired by the Sheldon Adelson-backed Coalition to Stop Internet Gambling.
The falsehood that refuses to die
On substance, Warner is just the latest in a growing list of elected officials to inaccurately weigh in on online gambling by mischaracterizing official documents and/or conflating illegal offshore online gambling sites with licensed and regulated sites.
Warner cites FBI findings as the basis for his concerns. But what he’s really citing are other people’s mangling of FBI findings.
In a USA Today op-ed from January 2014, former New York governor and former CSIG co-chairGeorge Pataki wrote:
“In a September 2013 letter to Congress, the FBI warned that while many industries are vulnerable to money laundering, Internet gambling goes a step further by providing an anonymous forum for bad actors to move money undetected…”
The FBI didn’t warn Congress about online gambling in 2013. It was simply responding to a request from Congress about potential dangers. What opponents of online gambling also like to ignore was the FBI’s assertion later in the letter that “Many of these methods could be detected and thwarted by a prudent online casino.”
When the FBI says “prudent online casino,” it’s saying a licensed, regulated online casino.
Unlike the black market offshore casinos and gambling sites that thrive under prohibition, licensed online gambling sites have to comply with the Bank Secrecy Act and other anti-money laundering regulations. This creates a paper trail that even Maxwell Smart could follow.
This fear has long been put to bed. At a California online poker hearing in April 2014, attorneySanford Millar told the committee, “Money laundering is not an issue for intrastate online poker…there are too many trails.”
More than three years later, opponents are still trying to fool people with their mischaracterizations.
Here’s why no one launders money at licensed online gambling sites in the US
There’s simply no evidence of money laundering at licensed online gambling sites.
As noted in a prior column, these same money laundering myths are still being perpetuated:
- All large transactions have to be reported under the Bank Secrecy Act.
- All deposits and withdrawals are tracked, as is every bet and wager a player makes, and, in the case of poker, to whom they lost money.
- Players must first go through an invasive registration process that includes divulging your Social Security number and other information.
- Sites set hard deposit limits (they also allow players to further refine them), making it impossible to move large amounts of money around.
- Regulated markets are ring-fenced. Therefore, they cannot accommodate international transactions. That’s one of the hallmarks of most money laundering schemes.
- Player-to-player transfers are not allowed in regulated markets. Many black market sites do allow players to simply transfer money to one another.
Continued conflation of legal and illegal online gambling is worrying
Allowing player-to-player transfers isn’t the only point of divergence between licensed and black market online gambling sites. Black market sites don’t have to adhere to any of the safeguards listed above.
In response to a letter signed by 10 state attorneys general calling for a federal online gambling ban, Rep. Dina Titus (D-Nev.) told Online Poker Report last year:
“… throughout the letter, there is no distinction made between legal online gaming and illegal operations. In states where online gaming is legal and regulated, there are extensive consumer protections in place that are enforced by state law enforcement authorities.”
Prohibition would simply create an environment where black market operators can thrive.
A ban would not reduce the possibility of money laundering (a problem that doesn’t exist in regulated markets). It would create opportunities for nefarious people and groups to launder money.
Elected officials unwilling or incapable of understanding the obvious differences between legal and illegal markets is in a word, alarming.
Congress already went down this road
If Warner wants to educate himself on the possibility of laundering money through online gambling sites, he could simply examine Congressional reports.
Another anti-online gambling crusader, former Rep. Michael Fitzpatrick (R-Pa.) chaired a task force that spent two years looking into the potential to launder money to terrorist organizations, including over the internet.
Despite having introduced legislation to ban online gambling, Fitzpatrick’s report makes no mention of internet gambling. This was a report conducted by an anti-online gambling crusader who would have liked nothing more than to expose vulnerabilities. Online gambling’s absence can only mean no vulnerabilities were found.
As Poker Players Alliance Executive Director John Pappas said when the report’s findings were released:
“The report is a straightforward look at the potential terrorism financing threats we face as a nation and what types of legislation can combat it. Not surprisingly, internet gaming and RAWA are nowhere to be found in this report.
Despite the exaggerated and often reckless claims of our opponents, the fact is, regulated internet gaming is not a conduit for money laundering, terrorism, or any other illegal activity. In fact, attempting to engage in such activities on a regulated iGaming website would be perhaps one of the dumbest moves a criminal could make. Criminals and terrorists are smart enough to avoid iGaming’s transparent and auditable safeguards. I only wish iGaming opponents were smart enough to stop their fear mongering.”