It appears that online gambling is suffering a similar fate to that of marijuana or alcohol during prohibition. Consumption of the good is pretty much inevitable as Americans continuously express a strong desire to be able to gamble online. Since the passage of the Unlawful Internet Gambling Enforcement Act in 2006 and the events of United States v. Scheinberg in 2011 arguing that online poker sites were illegal, there has been an upswing in American usage of international, unregulated websites as a means of online gambling. This shift is taking millions of dollars away from domestic companies and putting it in the hands and questionably-legitimate black market sites overseas. Aside from this economic trade-off, it has also been documented that these offshore accounts are a very convenient source of money laundering for international organized crime syndicates. The ability to wager on card games allows criminals to make fake bets and intentionally losing as a means of transferring money between two parties. The IMF published a new report earlier this year bringing to light the massive problems with money laundering and how simple it is to destabilize financial institutions via easy-to-access back channels.
A very clear solution in the case of online gambling is similar to the arguments being made for marijuana--legalize it. A legalized market for online gambling would create a regulated system within the US and would force unregulated international operators to leave the market, as they would not be able to compete with US companies. A multinational anti-money laundering symposium held earlier this year came to the same conclusion. Regulation would prevent the under-the-table atmosphere necessary for criminal money laundering to thrive. Thus, legalization would not only bring all of this money back into the US, providing a much-needed economic boost, but would also prevent the illicit trading of funds between international criminal syndicates.
-Amit Bilgi
Sources:
http://mississippilawjournal.org/wp-content/uploads/2012/04/1_Rychlak_Final_Edit.pdf
http://www.imf.org/external/np/exr/facts/aml.htm
http://www.wiso.uni-hamburg.de/fileadmin/bwl/rechtderwirtschaft/institut/Ingo_Fiedler/Online_Gambling_as_a_Game_Changer_to_Money_Laundering_01.pdf
http://www.antimoneylaundering.us/inter_det.php?id=44
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