Federal officials are trying to link Online gambling to terrorism. Why do you ask? Because the U.S. government is upset because billions of gambling revenues is leaving the US that may be laundered; ending up in the hands of terrorist groups.

Many land based casinos have stayed clear of the Internet and offshore enterprises because of the Patriot Act. All U.S. casinos with annual gambling revenue of more than $1 million are classified as “financial institutions” by the Patriot Act and subject to strict government regulations, including adopting money-laundering programs, identifying the identity of foreign nationals and filing a Suspicious Activities Report to the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). Online operations skirt all these rules.

The government is cracking down and creating scare tactics. Several principals of online gaming companies’ subsidiary operations have been arrested in recent weeks.

• On Jan. 15, federal agents arrested Stephen Lawrence and John Lefebvre, former directors and founding shareholders of Neteller. Their company is a publicly traded Internet-payment processor used by many online gambling sites, one of which continued serving American players after passage of the Unlawful Internet Gambling Enforcement Act. BusinessWeek magazine estimates Neteller made nearly $850 million in fees during the first half of 2006 — the bulk of it from American bettors.
• The U.S. is seeking the extradition of Gary Kaplan from Costa Rica. Kaplan is the former owner of BETonSPORTS, which has ceased taking sports bets from Americans. David Carruthers, former CEO of the company, was arrested in the Dallas last July and is currently under house arrest at a hotel in St. Louis, awaiting trial. Carruthers, a food connoisseur and wine expert, appeared in court in leg irons.
• Last week, subpoenas were issued to at least four Wall Street investment banks to hand over details of their dealings with online gambling companies. The firms reportedly are HSBC, Credit Suisse, Deutsche Bank and Dresdner Kleinwort, which have underwritten public offerings of some of the most popular and profitable online gambling sites, and have offices in London, a city that is the fundraising center of the online gaming industry. Shares in European online gambling companies, which already had been hit hard in recent months, fell as much as 14 percent after news of the subpoenas broke.