High risk actions

Below, you will find examples of actions that are considered high risk if you want to avoid getting into trouble with United States federal authorities.

Payment processing: Facilitating the transfer of funds to and/or from online gambling operators

While the legal situation is a bit fuzzy when it comes to actual gambling online, it is much more clear when it comes to the ban against facilitating the transfer of funds to and/or from online gambling operators. Several high-profile cases are available for study for anyone that wish to learn more about this. Here are a few examples:

  • In January 2007, the founders of Neteller were arrested in the U.S. and charged with money laundering. Within a few days, Neteller left the U.S. market. Eventually, Neteller paid a hefty fine and has not services U.S. customers since.
  • In 2009, the U.S. authorities seized approximately $13 million from Ahmad Khawaja and Allied Wallet.
  • In November 2010, the U.S. authorities seized money in accounts held by the payment processor eWalletXpress. As a result, the company left the U.S. market.
  • In January 2011, the U.S. authorities seized almost $8 million from payment processors serving the poker sites PokerStars, Full Tilt Poker, Ultimate Bet (UB) and Absolute Poker.

Accepting wagers on sport over U.S. phone lines

U.S. phone lines clearly falls within the Wire Act, which in turn makes it illegal to accept sports bet over U.S. phone lines.

phoneSeveral examples of the possible consequences of violating the Wire Act can be found in the cases involving BetOnSports. In July 2006, David Carruthers was arrested while changing planes in Texas, U.S. on his way from the United Kingdom to Costa Rica. At the time, he was the CEO of BetOnSports book, a company that accepted sports bets over U.S. phone lines. BetOnSports was based in the United Kingdom, but accepted wagers from U.S. residents and did so over U.S. phone lines. In April 2009, Carruthers pleaded guilty to federal racketeering, and the following year he was sentenced to 33 months in prison.

In March 2007, Gary Kaplan, the founder of BetOnSports, was arrested in Puerto Rico. In November 2009, he was sentenced to 4 years in prison and ordered to forfeit $44 million in revenue. In June 2009, Gary Kaplan’s brother and sister pleaded guilty to two felony conspiracy charges. They were sentenced to 10 months of house arrest and agreed to forfeit over $6 million dollars held in Swiss bank accounts. In December that same year, the company BetOnSports was fined £28.2 million.

Accepting wagers on a server located within the U.S.

Accepting wagers on a server located within the United States is a high risk activity from a legal perspective regardless of whether its sports betting wagers, casino wagers, poker wagers, or anything similar. You will be hard-pressed to find any online gambling site that keep their servers within the United States. Even gambling sites that still accept bets from U.S. residents normally have their servers located outside the United States. Of course, U.S. authorities maintain that accepting wagers in this fashion is illegal regardless of the location of the servers, but it is more difficult for them to do anything substantial against gambling sites with servers outside the U.S.

Taking sports wagers on server located outside the U.S.

As mentioned before, it is unclear if the Wire Act applied to casino wagers, poker wager and similar. When it comes to sport wagers on the other hand, the legal situation is much more clear, and accepting sports wagers is generally seen as an activity that falls within the scope of the Wire Act. This is why accepting sport wagers from U.S. gamblers is considered high risk even if it is done from a server located outside the United States.

Jay Cohen located this World Sports Exchange in Antigua, but accepted wagers from U.S. residents. When he returned to the U.S. he was arrested, and in the year 2000 he was sentenced to 21 months in prison and a $5,000 fine. (He ultimately served one year in prison.)

In 2012, U.S. federal authorities indicted Bodog founder Calvin Ayre, along with David Ferguson, Derrick Maloney and James Philips (all four being Canadians). They were charged with running an online sports gambling business and money laundering. The Bodog.com domain was seized, but by then Bodog has already established itself on other domains such as Bodog.eu.

Accepting money from U.S. players and help them place bets while you are in the United States

In 2004, the webmaster of the (affiliate) portal InternationalNetCasino.com was indicted by New Jersey authorities for facilitating gambling. According to New Jersey authorities, the webmaster had accepted money from prospective U.S. gamblers and helped them place bets online. He was convicted, but the sentence was pretty much a slap on the wrist: the 8 days already served, 90 days of community service and $1,330 in fines.

From a legal point of view, this type of behavior is less risky the actions described above, but it is still quite risky since you aren’t limiting yourself to simply advertising betting services.

Promoting Gambling in the US

Promoting gambling in the US can be risky.  It is considerable less risky then operating gambling sites or accepting bets from US players but there are examples of websites that have been targeted for promoting gambling to US players.  The most well known example of this is that the Washington state authorities shut down the web portal IntegrityCasinoGuide.com. We recommend against promoting gambling related content towards the US market. If you run an English website about casino gambling then we recommend that you make its official target market the UK. If you do then you should be safe.  A website that is legal in Europe such as www.casinofreespins.eu is likely to be illegal if it was made to target US players. The risk of being target is small but it is still best avoided.