Enemies of online gambling are hoisting their pitchforks and gathering the kindling for the ongoing witch hunt against anyone bold enough to take Internet bets from American clients.
There were two separate court appearances this past week and although details of the cases have yet to be unraveled, you can’t help but think that this is a warning shot across the bow of the rest of the industry – the American government will no longer turn a blind eye to online gambling.
The accused parties appeared in court this past week. Former BetOnSports.com chief Gary Kaplan was brought before a judge in a St. Louis, Mo., courtroom to answer to a list of 20 charges. He was arrested in the Dominican Republic last month and extradited to the United States after eluding authorities for nearly eight months.
Kaplan pleaded not guilty to the indictments, which included racketeering and conspiracy charges relating to his former company’s acceptance of allegedly illegal wagers over the Internet.
In another courtroom in Salt Lake City last Friday, seven people and four companies faced charges that they facilitated money transfers between customers in the United States and Internet gambling operations outside of the U.S., namely BetUS.com.
According to The Associated Press, the other companies facing charges include CurrenC and CurrenC Worldwide, which are based in a number of countries outside the U.S. and are allegedly responsible for processing credit card and wire transfers for the illegal business. Two U.S.-based companies, Hill Financial Services and Gateway Technologies, were also in court and are alleged to have provided “accounting and technical services” to the offshore bookmakers.
The allegations state that these companies misclassified payments in order to allow funds to skirt American laws which forbid financial institutions from facilitating payments from American residents to online gambling operations.
This isn’t the first time members of the online gaming industry have run afoul of the U.S. justice system, but now, with the Unlawful Internet Gaming and Enforcement Act, the government has a new weapon in the war against these “criminals” and they intend to use it.
"Virtually all Internet gambling is illegal" under American law, U.S. Attorney Brett Tolman said in announcing the indictments.
"Individuals and businesses that facilitate illegal Internet gambling are violating numerous federal and state laws. Payment processors who attempt to hide the true nature of the transactions they are conducting and the Internet gambling websites that use these payment processors will be prosecuted and brought to justice.”
It’s hard to understand why the government is suddenly taking such a hardline stance against an industry that has existed in Britain, Australia and countless other countries for decades without tearing apart the social fiber of those nations. In Britain, bet shops are registered, regulated and taxed as part of a system that has created a multi-million-dollar industry and contributed massive amounts of money to tax coffers.
In the U.S., because of new regulations, bettors are now forced to deal with local bookmakers who operate under clandestine conditions and often have ties to organized crime. The government is missing out on a potential tax windfall and allowing that money to line the pockets of mob bosses instead.
The logic of this new legislation is lost on most observers. Lawmakers behind the UIGEA say they are trying to protect citizens from a dangerous form of entertainment, but how is wagering in one’s own home more dangerous than doing so in a Nevada casino? For that matter, how is betting on sports or card games online more of a threat to American families than doing the same on horse races or lotteries, which are exempt from the law?
The World Trade Organization actually ruled in favor of Antigua when that nation took the U.S. to task over these inconsistencies. Despite pressure from the international community, however, the U.S. stuck by its policies, inconsistent and unfounded as they may be.
But these same inconsistencies are the only saving grace for U.S. residents who want to continue to bet with established online sportsbooks. While some operators are suffering through prosecution in U.S. courts, others are continuing on as usual, apparently willing to accept the risks of doing business with American bettors.
However, if online bookmakers continue to be arrested and charged by American authorities, it might not be long before many more bettors in the States take a chance with shady bookies at seedy bars and back-alley betshops. And all because of this government’s misguided attempt to “protect” them.