The IRS Criminal Investigation unit has its sights set on illegal sports gambling operations, especially with the start of the college football and NFL seasons right around the corner.
In an announcement last week, IRS-CI warned that illegal sports gambling often fuels other financial crimes, such as tax evasion and money laundering.
During the past year, IRS-CI initiated 54 illegal gambling investigations involving $11.5 million that were linked to an estimated $126 million in laundered funds.
IRS-CI noted it has maintained an 84% conviction rate in prosecuted illegal gambling cases, and defendants were sentenced to an average of 37 months in prison.
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IRS-CI is Cracking Down on Illegal Sports Gambling
“Illegal gambling isn’t just about placing unlawful bets,” IRS-CI Chief Jarod Koopman said in a statement on Aug. 13. “Our investigations routinely uncover money laundering and tax crimes tied to illegal gambling operations. Following the money allows us to dismantle larger criminal networks.”
According to IRS-CI, recent investigations show how illegal gambling operations frequently generate millions in illicit proceeds.
A California man was sentenced in June to 27 months in prison for tax evasion, operating an illegal gambling business, and money laundering. Unlicensed and illegal gambling businesses used websites operated by his Costa Rica-based business to place bets, which is illegal under federal law. He then laundered millions of dollars derived from this business and evaded taxes on approximately $4.2 million in income.
An Indian national who resided in Georgia pleaded guilty in May to multiple conspiracy charges tied to wire fraud, operating an illegal gambling business and money laundering. He and his co-conspirators ran illegal gambling businesses at four separate locations in Missouri under the guise of internet amusement arcade games, skill game arcades, and adult arcades. They obtained approximately $9.5 million in gross proceeds from their wire fraud scheme and illegal gambling businesses and conducted various financial transactions to launder the proceeds.
IRS-CI cautioned taxpayers to steer clear of illegal gambling operations.
“When placing bets, use state-licensed gambling platforms that are legal in your jurisdiction. Steer clear of offshore and crypto-based gambling platforms that attract anonymous users by avoiding Know Your Customer protocols and financial reporting obligations. Make sure to report all gambling winnings as taxable income to avoid civil and criminal penalties from the IRS and never accept payment to place bets on behalf of someone else or gamble to obscure the source of funds. You could find yourself in the middle of a money laundering conspiracy,” IRS-CI said.
“Sports enthusiasts who are unsure about their tax obligations or have questions about reporting gambling income are encouraged to consult tax professionals or visit the official IRS website for guidance. Ignorance of the tax law does not exempt individuals from their responsibilities. “
Additional information on reporting gambling winnings and losses is available on IRS.gov.
Photo credit: Resource Database/Unsplash
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