Online gambling has surged in popularity, offering a convenient way for people to place bets and potentially win big from the comfort of their own homes. According to Statista, revenue in the market is expected to reach US$107.70 billion in 2025, with user penetration growing from 6.6% in 2025 to 7.6% by 2029. The number of users is forecast to rise to 291.4 million by 2029, reflecting the sector’s global appeal and increasing accessibility.
However, this rapid expansion also draws attention to the divided opinions on gambling. While some view it as a legitimate form of entertainment, others raise ethical concerns about its potential adverse effects, including financial harm, addiction, and its broader societal impact. Beyond these debates lies a pressing risk: the potential for online gambling platforms to be exploited for money laundering and other illegal activities.
And this is what we are going to discuss here..
Why Online Gambling and Gaming Attracts Money Launderers
Why has online gambling become a target for money launderers? It’s due to a combination of inherent characteristics and external factors:
High Transaction Volumes: The large number of transactions on online gambling platforms makes it easier for money launderers to move significant amounts of money without attracting attention. It’s easy to hide one illegal activity among many legitimate ones.
Relative Anonymity: Online gambling often allows players to participate with minimal identification especially in countries where gambling and gaming is not effectively regulated. This offers a level of anonymity that appeals to money launderers.
Global Reach: Online platforms operate across multiple jurisdictions, some with less stringent regulations, providing opportunities for criminals to exploit regulatory gaps - making it easy for money launderers to transfer illegally-derived funds cross-border.
Minimal Scrutiny: Launderers can deposit large sums, place a few bets, and withdraw the money as "winnings," making the funds appear legitimate. Often, these types of transactions can go undetected.
Limited AML controls: Despite recent advancements in regulation, online gambling and gaming platforms frequently fall short of implementing the robust AML systems seen in more established industries. This gap is well-known to money launderers, who exploit these weaknesses to move illicit funds through the sector.
Money Laundering Tactics in the Online Gambling and Gaming Sector
Money launderers have developed several clever techniques to exploit online gambling platforms. These methods often involve manipulating the system to disguise the illegal origins of their funds, making them appear legitimate. Here are some of the most common tactics:
High-Stakes Betting: Launderers often place large bets with their illicit funds. Even if only a fraction of these bets result in winnings, the "clean" money can be withdrawn, creating the appearance of legitimate gains.
Betting on Opposing Outcomes: By betting on both possible outcomes of a game or event using different accounts, launderers ensure one side wins. The winning amount can then be withdrawn, disguising the illicit origin of the funds.
Minimal Play with Large Deposits: Criminals deposit significant sums into gambling accounts, place minimal or low-risk bets, and withdraw the remaining balance as legitimate "winnings."
Use of Proxy Bettors: Launderers may employ proxies to place bets or engage in gambling activities on their behalf, distancing themselves from the illicit funds and complicating investigation efforts.
In-Game Purchases: In online gaming, launderers purchase in-game assets or credits using illicit funds, then resell or transfer these items to cash out as legitimate earnings.
Cross-Border Transactions: Leveraging platforms operating in jurisdictions with weak AML regulations, money launderers transfer funds internationally under the guise of gambling activity, bypassing stricter controls elsewhere.
Integration with Legitimate Businesses: Some launderers invest in or partner with gambling-related businesses, using these legitimate operations as a front to launder money.
Multiple Accounts: Launderers create multiple accounts to bet against each other on the same game, ensuring one account wins while the other loses. The winning account can then withdraw the funds as "winnings," effectively laundering the money. This technique is often referred to as "chip dumping" in poker.
Virtual Currencies and Prepaid Cards: The use of virtual currencies or prepaid cards allows launderers to transfer money in ways that are harder to trace than traditional banking methods, making it easier to obscure the source of the funds.
Cryptocurrencies: Cryptocurrencies add a significant layer of anonymity to transactions, complicating efforts to track and identify illicit activity. This makes them a preferred tool for money launderers.
Third-Party Payment Processors and E-Wallets: Launderers may route their funds through third-party payment processors or e-wallets, adding additional layers of complexity to the transaction trail and making it more difficult for compliance professionals to detect suspicious activity.
The Importance of Robust Compliance Measures
Online gambling platforms face significant risks of being exploited for money laundering and fraud, but these risks can be mitigated through targeted and well-designed compliance measures. Many jurisdictions have introduced Anti-Money Laundering (AML) requirements, requiring operators to implement safeguards that address vulnerabilities and protect their platforms. These measures include the following critical components:
Thorough Know Your Customer (KYC) Checks
Verifying the identities of players is essential to ensure they are who they claim to be. Comprehensive KYC measures reduce the risk of fraudulent accounts being created and used for money laundering. Operators must collect and verify key identification documents and utilize biometric verification tools where feasible.
Monitoring Transactions
Effective transaction monitoring is vital in detecting and deterring money laundering. Advanced data analytics and machine learning technologies can identify unusual betting patterns, including:
Sudden spikes in betting activity.
Frequent deposits and withdrawals with minimal gambling activity.
Multiple accounts linked to the same IP address or other common identifiers.
Such patterns serve as red flags, enabling platforms to detect potential money laundering schemes early and take action.
Identity Theft and Fraud Prevention
Online gambling platforms are also at risk of being exploited by fraudsters using stolen identities. Fraudulent accounts created with stolen or synthetic identities can facilitate money laundering or other illicit activities. Implementing identity verification tools that cross-check user information with trusted databases can significantly reduce this risk. Regular audits and fraud prevention strategies must be part of an operator's compliance program.
Cybersecurity Measures
Robust cybersecurity is critical for protecting sensitive player data and preventing unauthorized access to gambling accounts. Platforms must implement:
Strong encryption for all user data.
Multi-factor authentication (MFA) for account access.
Continuous vulnerability assessments to identify and mitigate security risks.
These measures not only protect users from identity theft but also safeguard the platform from becoming a target of cybercriminals seeking to exploit weak defenses.
Reporting Suspicious Transactions
Identifying and reporting suspicious transactions is a cornerstone of compliance. Gambling operators are legally obligated to file Suspicious Activity Reports (SARs) when they detect potentially illicit activities. Prompt reporting helps law enforcement and regulators investigate and disrupt money laundering networks, protecting the platform and its users from further exploitation.
Conclusion
Online gambling is a booming industry, full of opportunities for both players and operators. But with that growth comes the responsibility to protect these platforms from being exploited by criminals. Money laundering is a serious threat, but with the right measures in place, gambling operators can significantly eliminate their risks.
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