Continuing from Part III...
4 - What this means is that your money is in the hands of people who are considered money launderers by the US government.
Again, you can choose to believe that your sportsbook operator of choice is really just rebelling against the tyranny of the US nanny state and is doing nothing wrong by simply supplying the demand that is the American sports bettor. Fighting an unjust law, and all that.
I sympathize with that position, and even support you in your quest to spend your money where you want. I hope that these offshore operators fight the good fight and find every way imaginable to stick it in the face of the DOJ.
But the fact is that the US government takes a different view, no matter how stupid. And the brilliance of this latest move by the DOJ is this money laundering angle because it's a tough one to beat.
You see, money laundering is a special kind of crime in the international world. Money laundering can be used to hide the proceeds of narcotics sales, arms sales, and terrorism funding. Mostly though, it’s about taxation and finding out where rich Americans are hiding their money, but you'll never get the American government to admit that.
Anyway, over the past couple of decades the American government has gradually been bullying all of the other governments in the world to share their banking information with the USA. Basically, what they say is, "Hey Panama! Either you start cooperating with us, or we will block your banks' access to the massive American banking system. And that would effectively stall your economy, won't it?" So Panama signs a treaty with USA and another tax haven disappears.
After that, if Panama wants to keep the American government happy, then they have to cooperate in any kind of money laundering investigation that America launches. And that includes seizing any bank accounts that the Americans believe are being used to launder money. And they don't wait until due process has been followed either, you are guilty until proven innocent and that money is locked up and inaccessible.
You can see where I am going with this, right?
This means that if you are wagering at an offshore sportsbook that takes US action, then your money is not going to be 100% safe as long as the American government might be able to bully the jurisdiction where that money sits.
Luckily, there are still a few jurisdictions out there that don't allow themselves to be bullied by America - and many current offshore operations hopefully utilize those jurisdictions - but those jurisdictions are becoming more and more scarce. Frankly, it's only a matter of time.
If your sportsbook has their money in a US-friendly jurisdiction, this means that the DOJ might do as they did with betEd and the poker sites and order a seizure of the money. In fact, it will inevitably happen.
But if your operator is playing in an unfriendly jurisdiction, then the Feds must instead try to intercept and block the transfer of your money as it moves between you and the operator. This is a never-ending game of cat-and-mouse that actually favors the operator more than the Feds, who really don't care enough to do the tedious stuff very well.
But the Feds are getting smarter about blocking the transactions, because it’s not rocket science. Basically, they sign up for one of these books, deposit some money, play for a few months, then make a withdrawal and follow the money. Somebody along the way is probably doing something illegal and the Feds jam them up.
Fortunately, the remaining list of US-facing offshore companies are a cagey lot who have decades of experience in staying one step ahead of the Feds, and I actually feel pretty good that they will be able to dodge the Feds indefinitely. But that doesn't mean you should get complacent, because it's a new world with new realities.
There are ways to protect yourself, and very shortly Lou will be posting a how-to on ways to keep your money as safe as possible.