For those uninitiated into the world of real-money online gaming, the activity has a long and drawn-out history in U.S. politics. Federal egislation was first drafted against the act of gambling online all the way back in the late 1990s, and the proposed law has been widely debated in the years since. As it stands now, the playing real-money games online is largely restricted to just four of the fifty states, but even in Delaware, Nevada, New Jersey, and Pennsylvania, the sites where these games can be found are often used for illegal purposes.
These websites, which have players interacting with other gamers around the world, gambling in games of chance or competing in skill-based games that offer real financial prizes, draw in thousands of players each day and continue to be the source of controversy.
It’s almost impossible to determine the online gaming site that holds the highest userbase, due to the sheer quantity of real-money gaming locations that have begun to appear on the web. Some games require a monthly subscription, while the majority simply take a small but not insignificant percentage of any withdrawals or deposits made on the site, meaning that some of the larger sites such as Bovada are raking in a substantial amounts. With all this money in play, it’s very easy to lose track of the smaller sums, and this is where those with ‘dirty’ currency in need of laundering can take advantage.
Money laundering is disguising funds that have been illegally obtained. There are many ways that this can be accomplished, including traditional casino gambling. The International Monetary Fund estimates that $1.5 trillion is laundered every year, a figure which is equivalent to five percent of the world’s GDP. If even only a small fraction of this amount is laundered through online gaming, it’s possible that tens of millions of dollars are changing hands illegally through real-money sites on a yearly basis.
With access to online gaming becoming increasingly prevalent, more and more funds are being deposited in online casinos each day. Because of their ability to hold and store currency, these sites are becoming an ideal solution for those looking to launder dirty cash, as they provide an excellent source of ‘income’ over time.
In a recent review of cybercriminal methods to launder money online, security researcher Jean-Loup Richet discovered that online gaming provides “an easy way for criminals to launder money” by giving them a quick and easy way to convert their currency into online finances and then back again. By transferring the illegal profits into credits on gaming sites, or chips in online casinos, criminals can then redeem their points back into fresh cash that they can now claim came from a legitimate source. Of course, if a user was to set up account and immediately perform this process, they would risk a knock at their door from the authorities very soon after, so money launderers must be a little more subtle with their actions.
To avoid suspicion, those criminals looking to launder a substantial amount of cash have to set up dozens of bank accounts to divide their earnings into smaller sums, keeping deposits to well-below $10,000. They also need to use a series of fresh accounts on a range of online gaming sites, rather than doing all their laundering from the same source, or it wouldn’t be long before the admins noticed the rather suspicious activity. Each account made then requires one or more influxes of cash, and the user should do a bit of light gambling before finally withdrawing their funds after an inconspicuous amount of time.
It’s a long and drawn-out process, which likely occurs over a matter of several months, rather than days, but it is very much an option for those looking to hide their crimes and keep the profits.
As criminals become aware of online gaming’s hidden potential, it’s possible that we could see a further increase in money laundering over the coming years. Although this should have little effect on those who are a part of the huge-scale online communities, developers looking to enter or expand in the market should certainly be wary of the risks.