The rapid expansion of the sports betting sector, along with the lack of uniform regulations, contributes to “significant and increasing risks of money laundering,” according to a report published by the Treasury and cited by The Wall Street Journal (WSJ). 

An estimated 67.8 million Americans will participate in Super Bowl betting this Sunday, February 11, marking a 35% increase over the previous year. According to the American Gaming Association (AGA), 28.7 million of these bettors will do so through legal sites in the country.

Citizens spent more than $220 billion on legal sports betting through 2023, since the legalization of gambling in most states following a decision by the United States Supreme Court in 2018, the WSJ reported.

The ease with which bets can be placed online via smartphones on sites such as FanDuel, DraftKings and BetMGM has led to an increase in online gambling, which includes betting on game outcomes and specific game details, such as how many three-pointers Will a basketball player score or who will score the first touchdown in a football game.

The Treasury report highlights that approximately 40% of sports betting occurs on illegal or offshore platforms, many of which continue to promote themselves to US consumers despite being located in jurisdictions with weak regulations.

One of the money laundering methods identified involves individuals depositing money into a gambling account and withdrawing it after making minimum bets, exploiting loopholes in the supervision and regulation of these activities. While land-based casinos have been under the direct supervision of financial crimes authorities for decades, online sports betting operations are covered by a varied set of rules.

Faced with this scenario and in the absence of clear guidance, Alex Costello, vice president of government relations at the AGA, assured that the sector has had to adapt casino compliance practices to the online betting environment and emphasized that “our Members are willing to work with the Treasury Department to ensure that legal, online operators have the guidance necessary to build on our current programs and meet the high standards already employed by the casino industry.”

To comply with the above, the industry has also requested specific guidance under the Bank Secrecy Act, an anti-money laundering law, to adapt its operations to high standards, similar to those of the casino industry.