The introduction of new merchant codes to identify legal online wagers has spurred a handful of U.S. banks to reconsider the compliance risks of processing payments for the online gaming industry, according to sources.
Since the 2011 indictment by the U.S. Justice Department of some of the most prominent online gambling sites in the world, the financial risks posed by Internet betting have changed, believes Christine Duhaime, barrister and solicitor at Vancouver-based Duhaime Law.
Undercover investigators, acting as a phony payment processor, used U.S. bank accounts to see how offshore gambling operations transacted more than $30 million with their American clients, according to federal prosecutors.
The U.S. government's crackdown on the largest online gambling operations this month has prompted American gamblers to place their bets elsewhere on the Web, with few signs of a long-term slowdown for the industry.
The U.S. Justice Department is seeking $3 billion in forfeitures and fines from three of the largest online gambling businesses and the financial institutions and individuals that helped to process bets.
Partisan bickering and a backlog of legislation are stymieing congressional attempts to overturn a controversial ban on online gambling before a June enforcement deadline, according to analysts.
A Canadian national laundered nearly $380 million and illegally processed payouts from online gambling companies to their U.S.-based customers, according to a federal indictment released Thursday. The indictment seeks more than half-billion dollars in forfeitures.
Odds that banks won't have to implement programs to detect online gambling have markedly improved this year after past efforts to halt the regulation fell flat, according to gaming experts.
The United States has ordered four banks to freeze $33 million tied to companies that dole out winnings to online poker players, according to an Internet gambling advocacy group.
As the Bush administration prepared this fall to step down in January, lobbying groups pushed for the issuance of regulations that few thought of as a priority: the final rules on a controversial Internet gambling ban.
The United States should consider strictly controlling, rather than banning, betting over the Internet, as is done in the United Kingdom, gambling experts and some lawmakers say.
In testimony before the House Financial Services Committee, online payment processors, data security professionals and other experts called for the licensing of Internet gambling businesses but could not agree on whether current technology can successfully verify the identities of online bettors.