US Treasury: More Sports Betting Means More Money Laundering Risk?
The 2024 National Money Laundering Risk Assessment identifies the growing sports betting sector as worthy of increased scrutiny
With the noise of the Super Bowl and other news in the gambling space, a new report from the US Treasury Department that delves into sports betting and money laundering has gone a bit under the radar.
First reported by the WSJ, the National Money Laundering Risk Assessment spends several pages out of more than 100 talking about the risks associated with gambling. Whole thing here. It opens:
The recent growth of gaming activity at brick-and-mortar casinos and online gaming platforms has raised the risk profile for U.S. casinos and gaming activity in the United States.
It then delves into a “special focus” on online gaming and the legal sports betting industry, saying, in part:
These factors, in addition to the volume of the betting activity, the rapid growth of the [sports betting] sector, and the lack of uniform requirements or regulations of these services across state, territorial, and tribal jurisdictions, present significant and increasing money laundering risks.
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The American Gaming Association’s Alex Costello, vice president of government relations, says the group has actively sought out guidance and rules around anti-money laundering in speaking with the WSJ:
“In the absence of such guidance, AGA members have built on decades of experience from robust casino compliance to create and deploy AML controls for online gaming,” Costello said. “Our members stand ready to work with the Department of Treasury to ensure that legal, online operators have the guidance needed to build on our current programs and meet the high standards already employed by the casino industry.”
A couple of takeaways from me:
I am not going to tell you that the legal and regulated sports betting and online casino industry is immune to risk on this front; it’s not. But money laundering is far more likely to take place at an offshore sportsbook or casino that serves the United States illegally. Like the AGA, I think the US government should take more interest in offshore rather than dismissing it as a problem without an answer. Even in the Treasury report, offshore is the last gambling sector mentioned, with no real solutions offered.
I’ll get on my favorite soapbox. While legal and regulated online sportsbooks are identified as potentially problematic by the Treasury, adjacent industries that are far less regulated continue to fly under the radar in discussions like this. For instance, there are dozens of real-money fantasy apps that are subject to none of the same regulations as sports betting and have far less robust AML controls, especially so in the newer and smaller companies in the space. You could make a similar case around other gray products that have almost no regulatory guardrails for operating in the U.S. There’s not much reason for these companies to get excluded from discussions like this.
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