Online Gambling Companies Indicted in the U.S
May 27th, 2011 - Posted by Andrew_Brocker in Betting Theory, Other
bettingexpert blog editor. Always taking the alternative route to finding the value.
Andrew discusses the recent indictments of a number of online gaming companies and executives in the U.S, allegedly involved in illegal gambling operations, fraud and money laundering.
Details were released this week regarding a sting operation in the U.S state of Maryland that has now led to the indictment of two online betting companies, the seizure of 11 bank accounts held in 5 different countries and 11 web domains including Bookmaker.com.
The indictments of the betting companies involved and their business owners are the result of an undercover operation in which Homeland Security Investigations set up a fake payment processing business under the name Linwood Payment Solutions. Over the past 2 years the operation processed US$33million in transactions and in doing so, undercover officials were able to infiltrate 6 online betting and gaming companies and detail a litany of criminal activity.
The two companies indicted are ThrillX Systems Ltd and K23 Financial Services. The owners of ThrillX, David Parchomchuk and Darren Wright, both Candadian and the owner of K23, Ann Marie of Costa Rica, are all charged with operating an illegal gambling enterprise as well as laundering money through a variety of web domains.
It is reported that the illegal gambling operations of ThrillX and K23 were based outside of United States jurisdiction but dealt predominantly with clients within the U.S and used payments processors to move funds between their various online gaming businesses and clients.
Linwood Payment Solutions, the payment processing business set up by undercover agents in an attempt to engage with high level identities in the online gaming industry, made over 300,000 transactions over the 2 years in which the operation was conducted with bank accounts located in the U.S, Holland, Portugal, Panama and Malta.
The poker site indictments
The Maryland sting follows on the heels of the indictments in Manhattan federal court in April of this year, which saw some of the most prominent online gaming websites such as Full Tilt and Poker Stars forced to cease operations in the U.S with their 11 owners being charged with bank fraud, illegal gambling and money laundering.
It is alleged that despite a law enacted in 2006 prohibiting banks from processing payments for offshore betting and gaming sites, these sites continued to do business, circumventing the law by deceiving banks into processing payments for them. They did this by disguising funds they received from their customers as payments to hundreds of non-existent online product merchants.
The 5 domains named in the Manhattan indictments were Absolutepoker.com, Fulltiltpoker.com, Pokerstars.com, Ultimatebet.com and UB.com.
It is suggested that U.S customers of these sites will more than likely not face individual prosecution. Referring to members of these sites as 'mere customers', Californian gambling law consultant Nelson Rose said “I'd say there's probably a better chance that they'll win the World Series of Poker than that they will be arrested.”
What does this mean for online betting and gaming?
Since the indictments, online bookmakers such as bookmaker.com and Bodog.com have begun re-routing their U.S customers to foreign domains such as bmaker.ag and Bodog.eu. The reasoning is the belief in the industry that such domains wont be so easily seized should the Department of Justice come after them.
Some online bookmakers such as sportsbook.com had begun to re-consider their operations in the U.S prior to the indictments, denying U.S citizens from opening accounts with them several weeks prior. (sportsbook.com was not one of the sites indicted)
What these indictments mean for bettors located in the U.S is a little hazy. But then, U.S law has always been a little hazy when it comes to online betting and gaming. Many online bookmakers refuse to take U.S clientele, while others appear to have no issue with it. And like many other aspects of the internet, when one loophole closes, operators just find another one. And it appears that many bookmakers troubled by these recent indictments will do just that.
Further, as ESPN's Chad Millman suggests, it's also a considered risk on behalf of those funding the various betting and gaming operations. Millman writes “The decision of whether to take a bet from the United States seems to be based as much on a founder's tolerance for risk as it is on existing law. If the boss is willing to taunt the authorities, the billion-dollar American betting market is something they'll openly tap.”
Which is to say, that in an area of the betting industry that can at times be highly irregular, it appears to be business as usual.
SOURCES
David Bains - Vancouver Sun - Two men indicted in U.S online gambling sting
Alistair Barr and William Spain - Marketwatch.com - Founders of top Web poker sites indicted
Tricia Bishop - Baltimore Sun - Baltimore feds target internet gambling sites
Patricia Hurtado - Bloomberg.com - Online poker player accounts frozen as U.S indicts operators
Chad Millman - ESPN.com - Despite blow, online betting still strong
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More restrictions and legalization will tie into our society all because this is a thriving business and everything around it. It is a case where fraud and other angles that comes in that ruins the fun and so to the Americans always want to control the situation. The grey areas are about to be addressed and that what this indictment is all about.