Is Online Sports Betting Making Money Laundering Easier?

A recent investigation unearthed some unsettling connections

A hacker using a computer. Here's why some money launderers are using sports betting platforms.
What happens when online gambling and money laundering converge?
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If you’ve been thinking more about the downsides of sports betting in the last few weeks, it’s not hard to guess why. The scandal that brought down Ippei Mizuhara, best known as Shohei Ohtani’s interpreter, is getting bleaker and bleaker as more details emerge. And it’s prompted a number of observers of the sporting world to reckon with gambling — including a memorable essay by Defector’s Barry Petchesky.

The Mizuhara case isn’t the only reason to be wary of gambling, though — another recent story offers a very different cause for concern. In an investigation for 404 Media, Joseph Cox explored the ways in which online gambling has become very useful for money laundering. Or, as Cox describes it, “dirty money went in, legitimately gambled winnings came out.”

Cox goes on to recount the case of Alex Bogomolny, the target of an undercover FBI operation, who offered to launder money for prospective clients using a combination of methods, including online gambling company FanDuel. (The prospective clients in this case were undercover agents.) As the article explains, the proposed laundering involved using compromised credit cards to open accounts with FanDuel, and then withdrawing money from those accounts from a casino in person.

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That’s just the tip of the illicit iceberg. The investigation into Bogomolny also included a massage parlor, hacking forums and improper usage of the mobile payment service Cash App. When 404 Media contacted FanDuel, the company noted that its guidelines require that users’ funds are “free from and unconnected to any illegality” — and that it does monitor accounts for suspicious activity.

That’s all well and good, but this investigation shows how easily this system can be gamed. And in a situation where large sums of money are being deposited and withdrawn, it’s not hard to see how something that might be suspicious in a different context might be less of a red flag in this one. It’s something that regulators and lawmakers will need to reckon with before long.

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