US Trying To Link Online Gambling To Terrorism

06 February 2007



The chips are down for principals in online gambling operations, and the cyberspace scenario is probably going to get worse. That’s because federal officials, already incensed over billions in gambling revenues leaving the U.S., are trying to link Web gambling to terrorism.

“The reason why a lot of land-based casinos have backed away from the Internet and offshore enterprises is because of the Patriot Act,” said Saverio Scheri of WhiteSand Consulting. “Investigators believe some of that money is being laundered and is ending up in the hands of terrorist groups.”….

All U.S.-based casinos with annual gambling revenue of more than $1 million are classified as “financial institutions” by the Patriot Act and subject to strict government regulations, including adopting money-laundering programs, identifying the identity of foreign nationals and filing a Suspicious Activities Report to the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). Online operations skirt all these rules….

“There certainly have been a lot of scare tactics but they’re working,” said Sue Schneider, president of River City Group, which monitors the online gambling industry. Schneider says federal investigators are trying to link online gaming operations to terrorist groups….

“They’ve been saying that since 9/11,” Schneider continued. “At some point it gets to be ridiculous and, more probably than not, what they’ll do is drive the business underground.”

One who agrees is Anthony Cabot, a Vegas-based attorney who specializes in Internet-gambling law. “After a while, it becomes a self-fulfilling prophecy and frighteningly similar to Prohibition,” Cabot said. “By forcing them underground, you increase the potential for less-reputable sites.”….

“With the new legislation, though that is ironically more likely to occur,” the source continued, “since Russian mobsters and others are likely to see unregulated, rogue sites as a way to raise untaxed money.”…

It’s hardly news to Cabot that investigators believe there is a link between online gambling sites and terrorist groups. “This argument has come up before,” he said. “There are probably 2,000 online gaming sites. Can you say that all of those have no relationship whatsoever to terrorism? No, but what you can say is that the larger companies operating out of the United Kingdom are completely transparent. They have public shareholders and dividends, and audited financial statements.”

Allyn Shulman, corporate counsel at Card Player magazine, added, “to specifically link terrorism to online gaming is disingenuous.” She believes that, rather than prosecute operators of online gambling operations, the federal government should investigate how to regulate and tax the industry.


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