News

Monday, 17 August 2009 06:15

The United States are currently under pressure to reform their online gambling laws from two fronts. It is under fire from without as the European Union presses its case with the World Trade Organisation.

It is also being chipped away at from within as Senator Barney Frank's attempt at overturning the 2006 UIGEA law gains momentum with ever more US senators joining the ranks. But following recent court cases involving online gambling companies where large sums have been legally appropriated by the US Treasury, the question must be asked as to whether the US actually needs to reform its anti-online gambling laws at all.

On Friday, the latest scalp to be taken by a US court was that of Gary Kaplan, founder of online gaming company BetOnSports. The Costa Rican base for his company seemed the perfect setting to run a business that rode the crest of the online gambling wave by offering US players an online alternative to betting in brick and mortar bookmakers. From a location perspective, it seemed that Kaplan's company was operating legally under the local jurisdiction of Costa Rica. Unfortunately, he was breaking the US law by offering his online services to US citizens.  

Kaplan managed to stay out of jail with an agreement in federal court to hand over to the United States government a cool $43.6 million in fines. This follows closely on the rapidly back-pedalling heels of a similar court case agreement made by PartyGaming and one of their co-founders, who agreed to a similar multi million dollar settlement.  

It appears that as long as this current system remains in place, the US government hardly needs to set out regulatory taxation from legal online gambling because they are making as much from hauling overseas based online gambling operators and their executives into court and dishing out huge fines as an alternative to potentially more severe forms of punishment.

As long as there are online gambling companies willing to take the risk of these kinds of consequences by operating within the US market, there will be a potentially constant stream of income for the US Treasury via the courts as these companies are caught up with.

Yet there lies the eye opening clincher. Online gambling companies that operate illegally in the US stand to make many hundreds of millions of dollars before they are caught. The risk they take may still be worthwhile if they only end up losing a fraction of that profit to the US courts.