The Internal Revenue Service’s Criminal Investigation unit has been cracking down on illegal sports gambling, even as the legal sports betting industry explodes in popularity.
Every fiscal year, IRS-CI opens over 30 illegal gambling cases, scoring a 92% conviction rate for prosecuted cases. Over the past five fiscal years, 96 defendants have been convicted of crimes tied to illegal gambling, getting jail sentences averaging between five and 33 months in federal prison.
In February, 10 men pleaded guilty to managing a multimillion-dollar sport betting operation named Red44 that ran online bookmaking and betting activities through an offshore server in Costa Rica. Their organization accepted an estimated $2 billion in wagers while in existence. As part of plea agreements, they agreed to pay more than $19.7 million in excise tax restitution to the IRS from acceptance of wagers from sports betters across the U.S. and to satisfy any outstanding income tax obligations.
“Over the last few years, we’ve seen a number of online crypto casinos offering options for sports betting,” said IRS-CI chief Guy Ficco in a statement Tuesday. “Many are based offshore and don’t follow Know Your Customer protocols, specifically to attract anonymous users who may be involved in illicit activity. If you want to gamble, do it safely and legally.”
When gamblers are placing bets, the IRS advises them to use state-licensed gambling operations and platforms that are legal in their jurisdiction, and to steer clear of offshore and crypto-based gambling platforms that attract anonymous users by avoiding Know Your Customer protocols. For more information, visit the IRS’ Gambling Income and Losses Page.
