Examples of the USA government fight against illegal Internet gambling. As part of improving the overall level of iGaming-literacy, today let’s talk about the laws that the United States government uses against online casinos, sports betting and online gambling in general, give examples of specific cases.
Examples of the USA government fight against illegal Internet gambling
As part of improving the overall level of iGaming-literacy, today let’s talk about the laws that the United States government uses against online casinos, sports betting and online gambling in general, give examples of specific cases. First, a summary of the basic laws:
The Federal Wire Act of 1961, is a U.S. federal law designed to combat organized gambling and sports betting. The law prohibits the use of wire communications (such as telephone lines) to transmit betting or information to help bet on sporting events or competitions. As the Internet has evolved, questions have arisen about the Wire Act’s application to online gambling. In 2011, the U.S. Department of Justice expressed that the law only applied to sports betting, not other types of gambling. In 2018, however, the Justice Department revised its opinion, arguing that the Wire Act applies to all types of gambling.
Illegal Gambling Business Act, IGBA of 1970. The federal law prohibits the conduct or participation in illegal gambling.
UIGEA (Unlawful Internet Gambling Enforcement Act) is the USA federal law adopted in 2006, which aims at fighting against illegal online gambling. The law prohibits gambling businesses from accepting payments related to gambling activities that violate other USA or state laws.
RICO (Racketeer Influenced and Corrupt Organizations Act) is a US federal law passed in 1970 which is used to fight organized crime.
Some cases (not all)
United States v. Cohen (2001) – World Sports Exchange executive, Jay Cohen, was accused of violating gambling laws and conducting illegal sports betting over the Internet. As a result, Cohen was convicted and sentenced to prison.
United States v. Baretta (2002) – This case alleged that a group of 12 people were involved in illegal gambling activities, including running illegal lotteries and sports betting, using phones and the Internet. The participants were charged with violating the RICO law, and some were sentenced to prison terms and fines.
United States v. BetOnSports PLC (2006) – In this case, the U.S. government brought charges against the British company BetOnSports PLC and its executives, including violating gambling laws and conducting illegal sports betting over the Internet. The company pleaded guilty and the executives were convicted.
United States v. Carruthers (2006) – David Carruthers, CEO of BetOnSports, was arrested in the United States and charged with violating gambling laws, conducting illegal sports betting over the Internet, and money laundering and bank account fraud. As a result, Carruthers reached a settlement with the government and was sentenced to fines and house arrest.
United States v. Kaplan (2007) – Gary Kaplan, founder of BetonSports(.)com, was arrested and charged with violating gambling laws, conducting illegal online sports betting, and money laundering. As a result, Kaplan was convicted and sentenced to jail time as well as fines and asset forfeiture.
United States v. Loveland (2008) – Charles Loveland was charged with violating gambling laws and money laundering in connection with his involvement in an illegal online casino that also offered sports betting. Loveland reached a settlement with the government and was sentenced to pay fines and asset forfeiture.
United States v. BMX Entertainment (2008) – In this case, charges were filed against BMX Entertainment and its owners for illegal gambling and money laundering. They were charged with running an illegal online casino, also offering sports betting. The owners of the company were eventually sentenced to pay fines and confiscation of assets.
United States v. Peacock (2009) – Robert Peacock and his associates were charged with violating gambling laws and money laundering in connection with their illegal online casino that also offered sports betting. As a result, they were sentenced to prison terms and fines.
United States v. Tzvetkoff (2010) – Daniel Tzvetkoff, an Australian entrepreneur and founder of Intabill, an online casino payment processing company, was arrested and charged with UIGEA violations, money laundering and bank account fraud. Subsequently, Tsvetkov cooperated with law enforcement and avoided jail time.
United States v. Campos (2010) – John Campos, a vice president at SunFirst Bank, was charged with UIGEA violations, money laundering, and bank account fraud in connection with processing payments for online poker sites. Campos reached a settlement with the government and was sentenced to fines and probation.
United States v. Scheinberg (2011) – Known as “Black Friday” poker, this case involved charges against the founders of the three largest online poker sites at the time, PokerStars, Full Tilt Poker and Absolute Poker. Isaiah Scheinberg, the founder of PokerStars, was charged with UIGEA violations, money laundering and bank account fraud. In 2020, Scheinberg agreed to extradition to the U.S. and reached a settlement with the government. As a result, he was sentenced to pay a fine and time in jail pending trial.
United States v. Bitar (2012) – Raymond Bitar, co-founder of Full Tilt Poker, was arrested and charged with UIGEA violations, money laundering and bank account fraud. Bitar reached a settlement with the government and was sentenced to pay fines and asset forfeiture.
United States v. Lederer (2012) – Howard Lederer, co-founder of Full Tilt Poker, was also charged with UIGEA violations, money laundering and bank account fraud. As a result, Lederer reached a settlement with the government and was sentenced to fines and asset forfeiture.
United States v. Ayre (2012) – Calvin Ayre, founder of Bodog online casino, was charged with violating gambling laws, conducting illegal online sports betting, and money laundering and bank account fraud. In the end, Eyre reached a settlement with the government under which he paid a fine and avoided jail time. (The trial was in absentia, via video link. The fine was a penny and he was given a one year suspended sentence, without probation. This is in spite of Bodog and Bovada LV turnover of billions dollars.
United States v. Legendz Sports (2013) – This case involved charges against a number of individuals associated with Legendz Sports, an organization that offered illegal sports betting over the Internet and telephone. Charges included violating gambling laws, bank account fraud, and money laundering. As a result, several defendants were convicted and sentenced to prison terms and fines.
United States v. Micon (2015) – Bryan Micon, owner and operator of the online poker site Seals with Clubs, was charged with violating Nevada gambling laws and operating unlicensed online poker games. Maicon eventually reached a settlement with the government and was sentenced to probation and a fine.
United States v. Lyons (2017) – Ryan Lyons was charged with violating gambling laws and money laundering in connection with his involvement in running an illegal online lottery. Lyons was sentenced to prison and fines.
And finally, let us remember the case of the founders of the well-known payment system Neteller. In January 2007, the two founders of Neteller, Canadian citizens Stephen Lawrence and John Lefebvre, were arrested in the United States.
Stephen Lawrence was arrested in the U.S. Virgin Islands on January 16, 2007 and John Lefebvre was arrested in Malibu, California on January 15, 2007. The arrests resulted from an investigation by the Federal Bureau of Investigation (FBI) and the USA. Department of Justice (DOJ), which at the time was actively fighting online gambling and its financing.
Both founders subsequently pleaded guilty and agreed to cooperate with law enforcement in exchange for a reduced sentence. As a result of the arrest and charges, Neteller suspended the processing of gambling-related transactions for customers in the United States, resulting in significant losses for the company. At the moment, Neteller is operating again in the USA, but in the regulated iGaming market.
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