Are U.S. Online Gamblers Laundering Money?

Each time that I play an online casino I get a twinge when I am about to deposit my money. Being from the United States, it is very difficult for me to deposit my money from my credit card and I am reluctant to tie my bank account to my online casino. Because of this I have been forced to deal with money changing systems that make me buy "phone credits" or gift cards which are then exchanged at the casino for playing credits. This whole system makes me feel uneasy and forces me to ask the following question: Are players from the United States who use these systems laundering money?

Money laundering is technically defined as "the practice of disguising the origins of illegally obtained money". In the States it is also a felony.

When the U.S. government passed the Unlawful Internet Gaming Enforcement Act of 2006 (UIGEA) it wanted to force online casinos shut by stopping the flow of money from American players to their casinos. While it technically did not define illegal gambling it took a big hit out of the industry by restricting the flow of funds. It has indeed become hard to deposit and withdraw funds from processors that are being cracked down on by the Feds (especially since Black Friday) and many of those payment processors are being shut down. This leaves us with directly tying our bank accounts to the casinos or using the gimmick purchases to be transferred immediately to the casino so you can play.

When you analyze the method of purchasing a gimmick good it is hard not to think we are money laundering. We are buying a good that we know we will never see and know that it is going to a casino. If this were standard money being transferred between the player, credit card company, and casino it would technically be illegal according to the UIGEA (which I think needs to be overturned in place of regulated gambling or be found unconstitutional). However when we purchase these fake phone minutes or gift cards, we are disguising the way our money is going into the casino; hence it is illegal gambling. When we withdraw our money from the casino, things get a little more murky in my book.

I always demand a check from the the casino. I don't want anything uploaded to my credit card, nothing wired to my bank. A paper check works best for me, and that is a funny thing in of itself. If my checks come from a casino in Antigua and the bank is from Texas but shipped from Quebec to my house in the States, what the hell IS that exactly? I have no clue, and I am unsure as to whether or not the UIGEA makes it illegal or not.

While what we are doing may or may not be technically a felony, I think that it is highly unlikely that any online player will ever see any consequences because of this action. It simply would tie up too many resources to prosecute people for playing a game, and there really is no harm being done in moving OUR money the way we see fit.

But then again I never thought I would see a lot of goofy things my government does. Shrimp on a treadmill anyone?

3 replies • Last post


CL-Ed's picture
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27 May 2011 - 12:18am

Obligatory IANAL (I am not a lawyer!) so take what I say as opinion and with a hefty grain of salt!

If money laundering is technically defined as "the practice of disguising the origins of illegally obtained money" then I don't see how buying a gift card to make a deposit can be laundering, unless you are using "illegally obtained" money to purchase the gift cards.

Receiving a cheque from the casino's bank is a different proposition and depends on whether online gambling is illegal. What if you withdraw the same or less than you deposit? What if it is a non-American bank? What if the casino started sending you cash in an envelope, thus removing American banks from the equation totally? (I am not recommending this!) The point is there are so many grey areas and unanswered questions. Seeing as though the UIGEA law doesn't define what "unlawful internet gambling" is I don't see how anyone can say for sure that it is. But that legal argument is rapidly approaching total irrelevance with the number of funds and domain seizures going on.

I don't think individual players should be very worried about being charged with anything. It is far easier and more effective to target the transaction processors and operators. However, if I was in the USA I would think very carefully about whether the risk of my casino's funds being confiscated is worth it. Seems to me that now is a very good time to sit back, take a break for a couple of months and see what happens. Or move to Canada or Mexico!

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barbadosslim93's picture
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27 May 2011 - 1:23am

I have gotten to the point where I am worried to see what is actually going to happen with my new hobby in the States, but I really don't care to take a break from the action. If the government has nothing better to do than try to come down on me, so be it. What are they really going to take from me?

I also see a transaction as being based on two main parties: The sender and receiver of funds. If the money is being illegally obtained and disguised, it is the sender who is aiding in that disguise making them complicit.

But I am not a lawyer and like I said I am indifferent to what the government may or may not do. 🙂

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27 May 2011 - 2:32am

Technically you probably are not. But I am sure glad I dont live in the USA!