Operation Choke Point Targets Online Gambling

May 26, 2014 Posted in Gambling Law by No Comments

News of Operation Choke Point first broke in January of this year and more information has come out recently. Earlier, the people over at Breitbart learned that the Obama Administration has launched a secretive initiative that seeks to destroy certain industries by putting pressure on banks, third party payment processors, payday lenders and online lenders.

In other words, the administration is targeting specific industries and seeks to deprive them of the financial services they need to survive. Online gambling is included in that list of industries although it’s unclear if Operation Choke Point will have any new effects on the industry that we haven’t already seen with the passage of the UIGEA in 2006.

There’s already a bit of a scandal element associated with the initiative because it was enacted without any sort of statutory authority. Also, some of the industries targeted by Operation Choke Point are legal industries and seem to have been chosen by the administration because they pose a “reputation risk” to banks.

In addition to online gambling, Operation Choke point also targets the following industries:

  • Ammunition sales
  • Escort services
  • Get rich quick schemes
  • Racist materials
  • Payday loans
  • Coin dealers
  • Cable box descramblers
  • Credit repair services
  • More here

Banks that are observed conducting transactions for some businesses named in the list are then pressured by regulatory officials to cut off all services to those businesses. Some banks have received subpoenas from the government and forced to pay fines. For example, Four Oaks Bank in North Carolina was forced to pay a $1.2 million fine. Four Oaks paid the fine but did not admit to any wrongdoing.

Several porn stars have also had their bank accounts suddenly terminated. These “actors” may not be in the most savory of business, but it’s a legal business nonetheless. The DOJ is targeting legal but “undesirable” businesses without any legal authority to do so.

This is troubling not just because online gambling is named, but because it gives the government broad and vaguely-defined authority to target specific businesses – some of which are legitimate enterprises. But again, it’s unclear if Operation Choke Point will have any new impact on the online gambling industry.

Even though the industries named by the operation do have their share of bad actors, the DOJ does not have the legal authority to harass them and put them out of business. Laws must be passed before the government is given the authority to put entire industries out of business. So far, this has not happened.

The story is still developing so we’ll just have to wait and see if it has any new effects on gambling sites. This doesn’t appear to target individual gamblers; it’s more of an attack on those involved in the business side. If anything new develops, I’ll let you know.