Declan Hill, an independent British investigative journalist and author, stated that the hundreds of manipulated outcomes from soccer games being revealed in Asia and Europe is not due to the regulation of internet casinos and sportsbooks, but the extensive underground gambling market that operates in Asia and Eastern Europe.  Hill, who is perhaps best known for his 2008 release of “The Fix,” a book in which he predicted that international soccer would soon be the victim of a major scandal, recently made the bold statement that game fixers are placing their bets with unregulated and illegal sportsbooks with connections to organized crime rings.

In a December interview with The New York Times, Hill said that the gambling industry in Asia is much larger than it is in Vegas and Europe combined.  He also noted that because most of it is filtered through illegal operations, concealing fraud and money laundering within a covert, criminal industry is considerably easier.

Experts in the gaming industry state that it is very difficult to manipulate the industry with corrupted outcomes when regulated internet gambling sites are involved.  This is primarily because the online records containing customer identities and transactions create a level of transparency that works to the criminals’ disadvantage.  In addition to this, advanced technology provides for the rapid detection of suspicious wagering amounts and patterns, particularly on more obscure sports that are often vulnerable to corruptible influences.

It has been reported that as many as 200 matches could have manipulated outcomes across international borders, many of them speculated to involve a number of referees and well known players.  However, legal, fully regulated sportsbooks have come out to say that their respective services were not targeted by cheaters, claiming that both the fixed matches and participating parties would be easy to identify.

The revelation made by Hill speaks highly of the desperate need for fully regulated and licensed internet gambling, sports wagering included.  With the lingering threat of corruption and criminal activity, this is the best way to ensure the integrity of the games and most importantly, protect the players.  The NFL seems to be high on its position that illegal sports betting is not a frequent thing, claiming that legalizing and regulating it would only tempt cheaters.  However, it is becoming clearer to see that regulation may be the only way to keep incidents such as the soccer scandal that has rocked international headlines from infecting the NFL and other major sports in the United States.

The opening of the online gambling market in France will consist of sports betting, horse racing, and community games of skill such as poker.  At this point, it is believed that online slots games, lotteries and common casino games such as black and roulette will be excluded from the market as the French government considers them to have a higher risk of addiction.

French Gaming Authority

ARJEL, a new independent public gaming authority, will be established specifically to regulate the online gambling market.  This authority will be responsible for the following:

Making suggestions on requirements for different types of gaming licenses to the government.

Ensuring compliance for policies associated with internet accessible games.

Preparing and attributing requests for online gaming operation licenses.

Monitoring internet gaming operations and taking action against illicit gambling sites and fraudulent activity.

According to a recent report, ARJEL with be given the power to prevent access to illegal websites through a direct relationship with internet service providers, which will allow them to block financial transactions.

Operator Responsibilities

The new online gambling legislation will impose strict requirements on the operators that service French players.  These requirements include:

Operators must provide information and confirmation on their identification, shareholding, and experience in the gambling industry.  They are also required to take the measures necessary to secure online transactions, protect minors, and prevent fraud and money laundering.

Online gambling websites must be accessible via a first level domain ending in the “fr” TLD (top level domain).

Licensees must be located within the member states of the ECC and EU.  If any headquarters of operators or shareholders are based in jurisdictions considered as non cooperative tax havens, they will be refused the licenses needed to legally offer their services in France.

Possible Time of Implementation

With the implementation of the legislation known as the Draft French Gaming Law in the works, ARJEL will likely need more time to establish an efficient architecture for regulation and license distribution.  According to senior officials within the French government, France will not begin granting online gambling licenses until sometime until 2010.  In all likelihood, the Draft French Gaming Law will not be officially enacted on January 1^st as originally expected, partly because of the detailed opinion of the EU Commission rendered back in June.  For this reason, French government officials are expecting the online gambling market to open up for the launch of the World Football Cup in June at the very latest.

Security Conscious Casinos

Interested yet hesitant parties should be comforted to know that reputable online casino operators understand their concerns regarding security.  These companies work diligently to prevent issues of fraud and hacking from occurring within their gaming environment.  The online gambling industry is prevalent in the UK and to no surprise, this area is home to internet casinos that offer players some of the best protection available.  At the same time, they realize that no website is ever 100% safe, so many are now working to improve their level of security to ensure players even better protection.  UK operators are currently working with internet security firms to enforce security protocols and verify identification.  Casinos are putting emphasis on mechanisms that prevent underage gambling as well as unauthorized account access from parties that are not validated.  These efforts are being made to better ensure that player casino accounts and most importantly, their funds, are protected.

PartyGaming and PKR.com are two of several online casinos in the UK that have decided to ramp up their security efforts.  They have let it be known that it is their obligation to keep the security systems up to date and also make sure underage gamblers are not participating.  When asked if these efforts were being made to eventually tap into the American market when and if regulation is introduced, both stated while they always look to expand, they are more concerned about providing a secure gaming environment.  In the eyes of PartyGaming and PKR.com, the potential of the U.S. market isn’t nearly as important as protecting the players.

Conclusion

If an online casino cannot provide dependable security, there is no way they will survive in this fiercely competitive market.  However, operators must be aware that the evolution of technology opens up the door to more security woes.  Every time a viable security tool or method is introduced, the criminals always seem to find a way around it.  Therefore, security systems need to be updated on a regular basis to keep the player community protected.  Thankfully, many online casinos in the UK and other areas realize this and do their best to ensure security for their players regardless of where they reside.

How Web Scraping Works

Also referred to as web harvesting, web scraping is a technique performed by a software program that extracts data from a website.  In some cases, the program is intended to simulate human exploration of the web or a particular site.  This is typically done by implementing a lower level version of HTTP or even embedding entire browsers such as Mozilla FireFox or Internet Explorer.  The technique of web scraping is quite similar to web indexing, which involves a bot crawling the web to index pages for search engines.  Though it can be used in a benign manner when it comes to web research and data integration, this technique is very dangerous in the hands of a hacker out to wreak havoc.

Virtual Casinos a Perfect Target

The fact that online gambling is entirely based on the web makes this prosperous industry a prime target for web scraping.  Knowledgeable hackers can use the method to extract the necessary details from a casino site and use their arbitration systems to play the odds at a level that virtually guarantees huge winnings.  They can use these tools to manipulate the odds in a way that improves their winning margin and also monitor the site to determine when it experiences the most traffic.  All of this is done in stealth manner, leaving the casino to believe they are dealing with a real human player while the criminal skates off undetected.

Analysts are predicting that the online gambling industry will be worth an estimated $125 billion by the year 2015.  If that is true, hackers and techniques like web scraping could become even bigger problems for the industry.  Security experts warn that web scraping occurs quite frequently, stating that a savvy hacker can easily steal data from a website, host it on another and redirect unknowing players.  Something this manipulative could lead to phishing, fraud and even identity theft.  While there are some preventative measures that can be put in place to minimize the risk, expects are concerned that far too many casino operators do not have the time or knowledge to implement them.

According to the RGA (Remote Gaming Association), the online gambling industry isn’t the haven for money laundering that many think it is.  With the aid of MHA Consulting, the RGA released a new report and stresses that there have been no definitive examples of money laundering occurring within licensed online gambling jurisdictions.  On the other hand, hearing this news from the RGA should be no big surprise, especially when considering that it is a trade body for several leading online casinos and software developers.  Because of this, it is natural that the organization would be doing everything possible to distance the industry from money laundering.

The truth of the matter is that the RGA didn’t have to cover up much of anything for this particular report.  How can we be so sure?  Well, MHA Consulting came to conclude that statutory and self regulation have both played a major role in dramatically reducing the number of documented money laundering incidents in jurisdictions that license internet casinos.  In addition, the report also concluded that online gambling is not particularly vulnerable to money laundering activities.  Other than the lack of documented cases, these findings were attributed to the actual makeup of the online gambling industry itself.  Since the transactions are processed electronically, all betting activities are recorded and analyzed, and the identities of all gamblers are known, the industry makes itself transparent for investigations and comprehensive audits.  The information used in the RGA’s report was complied by  reviewing bodies in European licensing jurisdictions, which are more open about online gambling than any other in the world.

The big story is that both the RGA and MHA Consulting have drawn the conclusion that the online gambling industry is in the clear for now.  However, the report also gives indication that the industry needs to remain proactive in the area of detecting and preventing the threat of money laundering.  To help achieve this, online casino operators should only work with licensing jurisdictions and stay aware of the advanced tactics being employed by the more sophisticated money launders.  Because the industry is still relatively new with equally new regulations, it is imperative for casinos to work together to keep the criminals away from the industry.

Enter the Wire Act

Enacted in 1961, the Wire Act was passed to prevent bookmakers from taking sports wagers via telephone.  At one time, accusations of violations were typically accompanied by a range of other charges such as conspiracy, money laundering and violations of the Illegal Gambling Business Act.  The one key point stressed by gambling proponents is that the Wire Act is enforced towards the gambling operator.  There is no language within the law that says it is illegal for the consumer to place a wager.

Because there was simply no way to have predicted online gaming in the early 1960s, from a practical aspect, there is no way the Wire Act could apply to casino gaming over the internet.  In recent times, the DOJ has been quite busy tangled up in legal disputes in pursuit of conviction for gambling operators, years before Congress even got involved.  In 2000, the DOJ garnered a successful conviction of Jay Cohen, World Sports Exchange president, for violating the Wire Act.

The So-Called Internet Gambling Ban

The UIGEA (Unlawful Internet Gambling Enforcement Act) was enacted in the fall of 2006, a law which states that it is illegal for any financial institution to facilitate monetary transactions between offshore gambling operators and U.S. consumers.  However, this legislation has been controversial from the start as it does not state that it is illegal for those consumers to gamble on internet sites.  The introduction of the UIGEA has led the online gambling industry’s biggest players away from the U.S. market, even though many private entities continue to service it.  These companies are banking that the UIGEA will not be able to block payments, giving them the ammunition to continue operating in jurisdictions in which U.S. authorities have no power.

No-Online Gambling States

Several states, including Illinois, Indiana, Louisiana, Michigan, Nevada, Oregon, South Dakota and Washington have passed laws that prohibit all unauthorized forms of online gambling.  Both Hawaii and Utah have also passed similar legislation.  Lawmakers in Nevada passed a law that permits intrastate internet gambling but have taken very few steps to introduce a viable system.  The argument has always been that implementing such a system would require advanced technologies that have the ability to accurately verify a player’s age and location, a system the DOJ claims would violate federal legislation.

In April of 2008, federal regulators and representatives from the financial industry went before Congress and testified that attempts to enforce the UIGEA would lead to substantial regulatory problems.  Resulting from this testimony was a new legislation introduced by representatives Barney Frank and Ron Paul, supporters of the legalization and regulation of online gambling.  This proposed legislation would prohibit the DOJ, Federal Treasury and Reserve from enforcing any regulations associated with the UIGEA.  To the current day, no official regulations for UIGEA enforcement have been adopted, leaving many still to wonder: what does this law really mean?

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