What can I substitute for gambling

News portal - Ruhr University Bochum

Gambling halls and casinos often have a reputation for being disreputable - regardless of whether it is the wildly flashing machine landscape or the glamorous glittering world with roulette and blackjack. Aren't these places with so much money changing hands the perfect cover for criminal energies? Just like Hollywood likes to sell it in films?

“One often reads about money laundering in the gaming sector in the media as well as in the legal literature,” says Johannes Güldner, doctoral candidate at the RUB chair for public law, especially administrative law. Whether casinos or amusement arcades, sports and horse betting or lotteries - there is no area of ​​gambling that is not associated with money laundering. "So far, however, there has not been a comprehensive study of the actual risks for money laundering in these areas," says the lawyer who wants to close this gap with his doctoral thesis.

Al Capone and its laundromats

He differentiates between two types of money laundering, depending on whether the perpetrators are gamblers or operators of gambling establishments. In the first case, a player misuses the game of chance to make illegally obtained money usable again for legal financial transactions. In the second case, the criminal sets up a gambling establishment to launder money - much like one of America's most notorious criminals did.

"The term money laundering comes from English, it is a one-to-one translation of money laundering," explains Güldner. "It goes back to Al Capone and his colleagues, who are said to have founded a laundromat chain to launder money obtained criminally."

For the doctoral thesis on the horse racing track

Johannes Güldner systematically examined whether the various types of gambling in Germany could be inviting for player or operator money laundering - using literature and internet research, on-site visits, questionnaires for representatives of the authorities and interviews with those affected from the gambling industry. He then compared his results with the situation in Nevada, especially Las Vegas, and Singapore, which are among the top ten gambling centers worldwide.

Except for the lottery, I've tried all forms of gambling myself.

"I looked at all areas of gaming in Germany separately, but only the land-based forms, not the Internet offers," says Johannes Güldner. This also included practical experience. "With the exception of the lottery, I tried all forms of gambling myself in order to become familiar with the processes," he explains. He bet on horses on the racecourse, tried his luck at the slot machine in the arcade, put on his suit for a round of roulette in the casino and bet on the outcome of soccer games. “Of course I only used small amounts and financed it with my private funds, not with research funds,” he says. "In the end, I came out about plus / minus zero."

In his doctoral thesis, lawyer Johannes Güldner analyzes which gambling establishments can really be used for money laundering and which only have a bad reputation.
© RUB, Kramer

So there was no money to be won with the doctoral thesis, but there was a lot of knowledge. First, Johannes Güldner compared the money laundering risk in German gambling halls and casinos, the latter being characterized by a more elegant flair and the fact that there are also classic table games such as blackjack or roulette; in amusement arcades, however, there are only machines.

Unlike in Nevada and Singapore

According to his analysis, Güldner estimates the risk of player money laundering in casinos to be low. “Theoretically, it would be conceivable that a player could exchange his illegally obtained money for chips, play for a small sum and then exchange the chips back into clean money,” explains the lawyer. However, he researched, players do not receive a receipt when they pay out at the cash register. “As a rule, you only get cash and no proof that the money comes from a legal source,” he says. So there is no advantage for the money launderer. In Germany - unlike in Nevada and Singapore - it is usually not possible to pay out to an account.

Regardless of whether it is a posh casino, sports betting or slot machine game - all areas of gambling are associated with money laundering.
© RUB, Kramer

Another factor that lowers the risk of player money laundering in Germany compared to Nevada and Singapore is that the casinos are very clear. As a rule, they consist of only one large room that the staff can keep an eye on. The ID of all guests is checked at the entrance. The turnover in German casinos is also lower than in Singapore and Las Vegas, where the casinos sometimes offer services such as credit institutes - this also makes them more attractive for money launderers.

Cameras get everything

However, the foreign gambling centers are building in a different way: In Singapore, where there have only been two casinos since 2010, there is a comprehensive set of rules for the prevention of money laundering. In the USA, the video surveillance system is extremely well developed. "Of course, German casinos are also monitored by camera," adds Güldner.

The staff ensures that the cameras have a clear view of every transaction. “Chips and banknotes must never be passed directly from hand to hand, especially in Nevada extreme care is taken,” explains the doctoral student. “Before the staff picks up money or tokens, the notes and tokens are fanned out so that the camera can capture them all.” In theory, every transaction made can be reconstructed in retrospect.

Arcades more vulnerable than casinos

According to Johannes Güldner, German casinos are also largely immune to operator money laundering. The hurdles to opening a casino are high: the application process is complicated and subject to various checks, and you need a high level of start-up capital. In some German federal states such as North Rhine-Westphalia there is even a state monopoly, so the casinos can only be operated by the state. Their number is generally small: In Lower Saxony - and that is the maximum value for a German state - there are just ten of them. "I therefore consider it almost impossible for someone to set up a casino for the purpose of money laundering, the hurdles are simply too high," concludes Güldner. "Amusement arcades are more likely to be considered".

Amusement arcades with their machine landscapes enjoy a particularly bad reputation in Germany when it comes to money laundering.
© RUB, Kramer

Because machine halls are much more numerous, the application process is not that complicated and the financial outlay is more manageable. "Here it could be worthwhile to revise the application process, that is, to take a closer look at where the funds for the foundation come from in order to put an end to operator laundering with the help of amusement arcades," says the Bochum researcher. However, he considers player money laundering to be just as unlikely in arcades as in casinos. Because here too, at the end of their visit, the guests only receive cash back without a receipt.

Money laundering in sports betting is hardly avoidable

Johannes Güldner sees a risk for player money laundering mainly in the area of ​​sports betting and certain forms of horse betting - namely when betting can be made on fixed odds. Anyone who wagers money here receives a receipt. And with the so-called arbitrage method, it is possible to use the funds in such a way that you are guaranteed to win back 90 percent or more of them. All illegally obtained money would be laundered and the loss small.

Güldner gives an example: “In a soccer match, you can bet on three cases: a home team win, an away team win or a draw,” he says. “You can bet part of your money at three different betting shops and bet on a different outcome for each.” Certain mathematical methods help to distribute the money in such a way that the potential loss is as low as possible. With two betting shops the player would lose, but with a substantial profit, he would end up with almost the same amount that he wagered - with proof that the money was won legally.

Moderate risk

"The arbitrage method probably harbors the greatest risk for player money laundering in the gaming sector," concludes Johannes Güldner. "It is almost impossible to take action against it, because in practice it is not possible to prevent or control whether a player is betting at several betting offices." In addition, the market for sports betting is confusing because providers with headquarters in other EU countries are also in Germany operate appropriate facilities. However, Güldner found out, land-based sports betting offices operated by providers outside the EU also fall under the German Money Laundering Act. In practice this means that these betting shops are obliged to report suspected money laundering cases.

It would often be easier to launder the money outside of the gambling industry.

In general, Güldner describes the risk of misusing the German gaming business to launder money for players or operators as moderate. There are certainly possibilities. “However, it would often be easier to launder the money outside of the gambling industry,” he says.

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