US Treasury pushes casinos on sports betting compliance

The Treasury’s Financial Crimes Enforcement Network, along with law enforcement and regulators, have noted that criminals are increasingly placing bets with casino sports books through intermediaries, concealing the origin of their funds and posing money-laundering risks, according to a letter FinCEN wrote to an industry trade group.

FinCEN called on casinos to identify third parties on whose behalf sports bets are being placed and to file suspicious activity reports as needed or risk civil and criminal penalties, according to the letter addressed to the American Gaming Association’s chief executive and meant to clear up any “misconception” about casinos’ obligations. The letter, dated Dec. 24 and made public on FinCEN’s website last Friday, was written ahead of the college football and NFL playoff seasons, both of which attract heavy betting activity. It also follows repeated calls from FinCEN for casinos to improve compliance standards and the AGA’s December release of its first set of anti-money-laundering best practices guidelines, developed with FinCEN.

While the AGA said it welcomes FinCEN’s guidance on sports betting, “the risk of money laundering is far greater in the vast, unregulated, illegal sports betting market than in the highly regulated, legal gaming industry,” the group saidon Friday in a statement on its website.

Though sports betting is widely prohibited in the U.S. outside of Nevada, some estimate nearly USD 400 billion is illegally wagered on sports each year in the country, wrote National Basketball Association commissioner Adam Silver in a November op-ed in the New York Times calling on Congress to adopt a federal framework to allow states to permit sports betting. He said that although the NBA and other sports leagues have opposed the expansion of sports betting in the U.S. for more than two decades, it is better to regulate the industry than to let it flourish underground. In New Jersey, state officials are battling the federal government over a proposal to allow sports betting there.

Law enforcement has been focusing on sport betting violations for some time, said FinCEN in the letter, highlighting a 2012 bust of a bookmaking operation associated with a major organized crime group that had connections to Las Vegas sports books. FinCEN has also noted “numerous instances” in which casino sports books failed in currency transaction reports to identify the actual people on whose behalf intermediaries were placing bets, the letter said.

The Wall Street Journal in November reported that prosecutors from the Manhattan and Las Vegas U.S. Attorney’s offices and investigators from the Internal Revenue Service and the Drug Enforcement Administration are coordinating their efforts to look into whether casino operator Wynn Resorts Ltd. violated money-laundering laws, including via its handling of sports-betting activities, according to people familiar with the matter. Wynn has said it isn’t aware of any criminal investigation into the company and didn’t immediately respond to a request for comment during a holiday weekend. In a continuing federal case being tried in a Nevada court, the FBI has highlighted connections among sports betting and two other lucrative gambling worlds—Macau high-roller junkets and high-stakes poker. U.S. regulators and an international sports watchdog say the combination is worrisome, given alleged organized-crime links and money-laundering risks in all three areas.