Are Casinos an Easy Way to Launder Money?
You may have seen casinos shown as places where money laundering is easily carried out. Movies like Casino and TV shows like Ozark make us think that money laundering through a casino is relatively common but how easy is it to actually do this?
You might be tempted to think about this when you see casino games with jackpots that come around very often, but however this industry is very regulated, so any illicit activities are easily caught.
What Is Money Laundering?
The history of money laundering takes us back to the 1920s, when the Mafia is said to have owned laundromats across the US. They were making huge amounts of money from illegal activities such as extortion and bootlegging, as well as illegal gambling.
Yet, the problem they had was that introducing all of this dirty money into the system was difficult. The way that Al Capone was captured for tax evasion was a clear example of the dangers of not having a legal stream of income to declare.
Therefore, the idea of money laundering was possibly introduced by mobster accountant Meyer Lansky, who is said to have created the term. He realized that they needed to put the illegal money through a series of processes to clean it by making it appear legitimate.
To do this, they need a business that looks legit, like a laundromat. It doesn’t matter if it makes money or not. The sole purpose of the business is to make it look as though the money is coming from a genuine source.
For money laundering to work, the business that the money goes through has to deal with a lot of cash. This is why laundromats were such a good idea, as they deal in cash. Casinos are the same, but on a much larger scale. The cash placed in bets was virtually untraceable in the past and casinos could declare whatever they wanted to as income.
Bear in mind that people are happy to lose some money doing this. If they launder a few million dollars, the loss of a few hundred thousand here and there isn’t a major worry. So even a casino that loses money would work well for them if it gave them a lot of clean money every week.
The history of Las Vegas is allegedly linked to the Mafia, with some sources claiming that the mob built up the city to what it is now and laundered money through the casinos for several decades. Is this true?
The 1995 movie Casino starring Robert DeNiro tells this story and suggests that the Mafia influence dwindled in the 1980s as the industry became more regulated and business-oriented. This film was based on real-life characters and appears to have got this element right.
Other sources confirm the same thing, that casinos were widely used for money laundering in the past but that this practice died out in the 1980s.
Legal Casinos, Illegal Casinos, and Online Casinos
At this point, we need to make a distinction between the different types of casinos that currently operate. While they all offer games like roulette, blackjack, and poker, the different ways of operating mean that they are different in terms of whether money laundering is possible.
If we start with the easiest to explain, online casinos are operated completely on the internet. The player signs up, confirms their identity, and then sends money to their new account online too. If they win the money is sent to their bank account through their chosen banking method, such as electronic wallets, cryptocurrencies, or bank cards.
Since all of the gambling is carried out online, this isn’t a cash business. It doesn’t, therefore, meet the criteria needed for money laundering. With no cash coming or going out, there’s no chance for the owners to hide dirty money from other sources.
With legal land casinos, the strict regulations now in place have a similar effect. The casino owners are tightly controlled so that they declare and pay tax on their proceeds each month. This means that if they attempted to launder money there is a very good chance that they would get caught and lose their prized license to operate.
Illegal casinos are different, because they operate outside the law and aren’t controlled by any type of authority. This means that they may or may not carry out illegal activities like this. Players at these casinos have no idea if the games are fair or if the operation is simply a front for other things.
It’s clear that the move to stricter gambling regulations has helped to flush money laundering out of the casino industry. It simply doesn’t make sense for the companies that operate these places to take any chances these days.
You can play in a reputable land or online casino without any fear that it’s a front for criminal activity. However, if you decide to play in an illegal casino then that’s a different matter and you might find that it isn’t all that it appears to be.