Why Money Laundering Doesn't Work with Online Casinos

Money laundering is a crime that is done all over the world, as those who are involved in illicit activities look to cover their tracks through this illegal act. One way that some people think it can be achieved is through the online casino industry. However, that is a misconception, as there are several reasons as to why the online casino industry just isn't compatible with the illegal act of laundering funds. These safeguards make betting online a more reputable thing for all involved.

1. Identity Checks

The recent waves of legalization of online casino gambling and sports betting in the United States and other countries have been a huge boost toward stopping activity like money laundering online. In the online casino world, this legalization has given rise to reputable brands like SugarHouse Casino being able to operate in many states. Those brands, in order to remain licensed, could never allow suspicious activity like money laundering to take place.

One way that they prevent such activity is by requiring players to provide their personal information with them before they can start depositing and withdrawing funds online. Just like a bettor needs to show their identification when they go to a physical casino to prove their age and identity, bettors need to provide that important info before they start playing online so that their transactions are properly attributed to them.

From an anti-money laundering standpoint, this measure would allow an online casino to see if a bettor was attempting to withdraw funds prematurely or asking customer support any suspicious questions. And with the other measures put into place to prevent that sort of activity, this important step sets the tone for preventing money laundering in the online casino space.

2. Wagering requirements

Another way that online casinos prevent the act of money laundering is to impose wagering requirements on their players. The goal of money laundering is for those involved in it to be able to put their ill-gotten funds somewhere that they can be cashed out of later, to make it look like the funds were gained legally from the second source. In this case, the goal would be to make it look like the funds were earned from winning at a casino. Thanks to wagering requirements, though, that isn't always doable.

Wagering requirements at online casinos make players wager the amount that they have deposited a certain number of times before the consumer is eligible to withdraw those funds. In the case of an attempted money laundering situation, that means that the person looking to launder the money would have to bet the money they are trying to launder at least once on their casino site of choice. During that round of wagering, it is possible to lose some of those funds which would make the money laundering more expensive than some criminals might want it to be.

Given the potential for money laundering to destabilize economies and otherwise impact the world in a negative way, the simple measure of making players wager their funds once or more is enough to make money laundering a less than ideal exercise in the online casino industry. While it might not be practical to ask other business to require the same compulsory transactions, this approach does work for the casino world.

3. Taxable winnings

Now that the world of online casino gaming is being operated by more and more domestic operators rather than offshore operators, the amount of winnings that can be taxed is increasing. Each state has a threshold of taxable winnings that, once reached, will see bettors taxed for what they have won. And with more bettors having state-sanctioned options to bet, those thresholds are enforced by the operators that are licensed to be there.

Whereas offshore operators had no obligation to tax individuals on the winnings generated at their sites, legal online casino options in each state do have an obligation to tax users on their winnings to remain licensed in those locations. Because of that, those looking to engage in money laundering would again be forced to pay to launder their money. As a result, their incentive to choose online casinos as their method of money laundering is all but demolished.

Money laundering is an activity that should not be done by anyone, as it attempts to defraud governments and business into passing off ill-gotten gains as legitimate. And thanks to measures taken by the online casino industry, the act of laundering money is not easy and will continue to be difficult.