Sports betting and AML: Don't gamble on compliance

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In May of 2018, the US Supreme Court (SCOTUS) struck down a 1992 law that had largely confined legal sports betting to casinos and sports books located in Nevada by prohibiting other states from operating or authorizing wagering on sporting events. With 18 states taking steps to legalize sports betting since the decision – and several others introducing bills to do so – companies now have an opportunity to tap into the estimated $150 billion of illegal wagers Americans make on sports every year. 

In addition to existing casinos and sports bookmakers, companies not traditionally associated with gambling have signaled interest in the industry. Online daily fantasy companies, which have previously argued their fantasy sports products were games of skill rather than gambling, have stated that they believe sports betting revenues will soon constitute the majority of their income. Meanwhile, the “big four” sports leagues have announced betting partnerships with major casino businesses since the SCOTUS decision, and a number of venture capital-backed startups have announced plans to launch app-based sports betting platforms. A national dining chain is even expressing an interest in allowing customers to place bets directly at their restaurants. 

This rush to enter the sports betting market has resulted in a growing number of businesses that may not be fully aware of their regulatory responsibilities and expectations. Federal regulators in the US have recently significantly increased their scrutiny of gambling businesses’ Bank Secrecy Act and Anti-Money Laundering (BSA/AML) responsibilities and sanctions programs. States have also been implementing their own licensing requirements and regulations, creating a patchwork of compliance requirements. 

As a result, companies that offer sports betting services – especially new market entrants – should implement or enhance their compliance programs to fully understand their regulatory requirements, adequately detect and report suspicious activity, and conduct real-time transaction monitoring.

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Jeff Lavine

Global Financial Crimes Leader, PwC US

John Sabatini

Risk and Regulatory Leader, PwC US

Vasilios Chrisos

Financial Crimes Unit, AML Leader, PwC US

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