An agreement between a global online gaming company and an Atlantic City casino to offer Internet wagering in New Jersey faces an uphill battle to gain the necessary approval from state regulators, say analysts.
While the popularity of virtual worlds has grown in recent years, lawmakers and regulators have been slow to address related vulnerabilities to financial crime, according to Dr. Clare Chambers-Jones, an associate professor in banking and finance law at the University of West England Bristol.
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.
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.
Federal regulators finalized rules Wednesday on how financial institutions should monitor and prohibit transactions involving illegal Internet gambling operations.
The U.S. House Committee on Financial Services voted down a bill Wednesday that would have reversed a federal ban on processing Internet gambling payments. The bill would have stopped regulations issued by the Federal Reserve and U.S. Treasury Department in October.
U.S. financial services regulators said they have not been able to finalize rules banning banks and payment systems from accepting funds from Internet gambling operations because the federal law requiring the ban is too vague.
The proposal, issued by the U.S. Treasury Department and Federal Reserve, implements the Unlawful Internet Gambling Enforcement Act. That act, which took effect in October, prohibits financial institutions from "knowingly" processing transactions from online gaming sites.
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.