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Technology Prevents Money Laundering and Other Abuses of Internet Gambling Sites

Technology allows gaming sites to stop cheating and money laundering Technology allows gaming sites to stop cheating and money laundering[/caption] While many view the internet as creating a much-needed vortex of freedom for individuals, there is also a perception that it creates a zone where abuse and anarchy are possible as well. Those who wish to federally shut down or regulate out of existence internet-based gambling have advanced the argument that such sites allow money-laundering and other abuses. In fact, the technology is already in use by online gaming sites that prevents these and other abuses. Concerns over money laundering via internet-based gambling were raised back in 2009 in regard to online poker playing web sites. Rep. Spencer Bachus (R-AL), who was then Ranking Member of the House Financial Service Committee, inquired about these issues with the FBI and received a response on Nov. 13, 2009 in which a claim was made that online poker games could be manipulated in an undetectable manner. That response from the FBI suggested money-laundering and other forms of abuse of online poker websites are possible, but it did acknowledge at the time, that “While casino software could very easily be employed to manipulate games, the FBI has no data in this area.” In regard to whether technology exists that allows the owners of online gaming sites to detect cheating and other abuses, Shawn Henry in the letter to Rep. Bachus acknowledges, “Technically, the online poker vendors could detect this activity and put in place safeguards to discourage cheating, although it is unclear what the incentive would be for the vendor.” The letter also refers to detection of individual computer users via the Internet Protocol (IP) address of their internet connection and the limited ability some may have of “manipulation” of IP address to make it appear they are connecting from a different location. This is often done with the use of so-called “proxy servers” that allow computer users to appear to be connected from a different IP address than their own, however, owners of servers have access to technology that not only allows them to detect (and block) users from employing proxy servers, but it also allows the detection, by going around the proxy server usages, of their actual IP address. Additionally, servers can detect other identifiers of individual computer uses, such as through the use of “cookies” placed on their computers, which most web sites, that write information to the individual’s computer regarding their use of that web site. In other words, a user who think he’s fooled the online poker site by creating a second user account while logged in using a proxy server, will only reveal (unknowingly) other information to the server that will identify him as the owner of the first user account he already created on that website. While Henry said it was “unclear” what incentives a website owner would have to use this technology and such safeguards to stop cheating, it is clear why they would. An online gaming site of any kind, gambling or non-gambling, that relies on paying customers having confidence they are playing an honest game knows it will rapidly lose business from customers if it is perceived they allow and condone any form of cheating. In a letter addressing these concerns, the Poker Players Alliance wrote about just such a situation involving an online gaming web site:The largest poker sites all use software to detect collusion. If a site is subjected to allegations that players are cheating, few players will play on that site. One major Internet poker site was found to be cheating by a group of industrious poker players who reviewed hand histories to prove that cheating was occurring. The case was featured on “60 Minutes,” and that site’s business never recovered.” In 2013, Rep. C. W. Bill Young (R-FL) inquired with the FBI on the same money-laundering concern, receiving a response from the FBI echoing the 2009 letter to Rep. Bachus. Once again, many of the same issues were addressed. Writing for the FBI, J. Britt Johnson, Deputy Assistant Director with the Criminal Investigative Division, wrote, “Online gambling, therefore, may provide more opportunities for criminals to launder illicit proceeds with increased anonymity. Individuals may use a wide array of mechanisms to conceal their physical location, or give the appearance of operating in a different jurisdiction, when accessing a website. Many of these methods could be detected and thwarted by a prudent online casino, for example, by blocking software designed to enable online anonymity.” While the notion that online gambling sites could enable their abuse by money-laundering criminals is used often as an argument for banning such activities, it is clear that through the use of server-based technology, and server logging of internet activity by internet and server providers, that any such attempts to game the system by criminals can be detected and stopped. Whether it is for the purposes of stopping money-laundering or cheating in online games, it is clear that operators of any type of online gaming sites have clear and strong incentives to use this technology to insure the integrity of their online games.]]>

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