Online Gambling Goes Underground?

A few weeks ago I posted about how The Internet Gambling Enforcement Act of 2006 meant the death of online gambling in the U.S., including use of third-party offshore accounts transfer providers like Neteller.

But internet gambling, not unexpectedly, has now head further underground, with offshore accounts and sites happily taking in U.S. customers, despite the law's provisions against them:

So much for the U.S. crackdown on Internet gambling. The Unlawful Internet Gambling Enforcement Act is designed to halt the flow of the roughly $6 billion that flows each year from U.S. gamblers to foreign Internet casinos by officially barring credit card companies and other U.S. financial institutions from processing illegal wagers. The Justice Dept. has long maintained that online poker gambling, like sports betting, violates terms of the 1961 Wire Act.

But within hours of the new bill's signing, [gamblers were] back online, [gambling on off-shore sites...]

Indeed, the new law will do little to stop online gambling, say gamblers, betting companies, and industry analysts alike. Instead, the law will drive out regulated, publicly traded companies [...] and make way for private gambling companies and banks based in nations where such industries are loosely policed at best. As a result, the new law could ultimately make billions of dollars in U.S. online gambling transactions more difficult to trace, and increase the likelihood that funds end up in criminal hands. [...]

Private online gambling companies, on the other hand, have been defiant in the face of the new law, arguing it does not apply to them and cannot be enforced. [...]

Whatever the legal grounds, private companies are benefiting from the role played by so-called e-wallets, which for years have been processing gambling payments credit card companies won't touch. [...]

The relative secrecy within which many private e-wallets operate has made them targets for money laundering and the transfer of funds to illegal organizations, says Molly Millerwise, director of public affairs at the Treasury Dept. "When such service providers are located in the U.S., they are subject to both state and federal controls that help against money laundering and terrorist financing." [...]

Many e-wallets process a mix of gambling and other transactions, making it difficult to indiscriminately block payments. In addition, some e-wallets use foreign banks to process transactions. [...]

Thus, the U.S. bank does not even see the name of the e-wallet when money is wired, and instead sees the name of another bank. [...]