Online Gambling Payment Processor Settles with US Feds

August 26, 2010 | News Category: Casino Banking

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The United States federal prosecutors have slowly been trying to prosecute those that they can in connection with online gambling violations. There are many who have agreed to settle out of court, paying the US federal government huge sums of money in order to stay out of court, even though it is not always clear that the law has been breached. It is most likely that the reason these online gambling operators, and others connected to the industry are prepared to take deals like this is because they would not be able to afford to take on the US federal government head to head.

A recent settlement has taken place between federal prosecutors and online gambling payment processors. The two payment processors, Allied Wallet, and Allied Systems, were run by Ahmad Khawaja. Khawaja, and the online payment processing sites used a bank in Scottsdale, Arizona, called the Goldwater Bank. The feds seized the sum of $13,335,248.91 from the bank accounts held by Allied Wallet, Allied Systems, and Ahmad Khawaja because funds that were deposited were traced back to PokerStars, and a number of other online gambling sites.

The civil forfeiture complaint was filed in Manhattan, and showed records from January 2009 to May 2009, which noted that the online payment processing company had received funds, and had attempted to hide their origins. A large portion of the money received was from PokerStars, and it seems that the online gambling company did not know that the payment processors were hiding where the funds were coming from.

PokerStars issued a statement that included the following: "PokerStars does not condone efforts by processors to conceal the nature or purpose of funds used to play online poker."

The online poker site also wanted to assure the public that they intend to be transparent in the future. "PokerStars has taken steps to ensure that processors properly disclose the nature of their business to their relevant financial institutions."

The funds that were seized by the federal authorities was what was used for the out of court settlement between Ahmad Khawaja and his payment processing companies, and the US federal prosecutors. Although it was a large sum of money, it is not likely that the seized funds would have been returned to the payment processing companies or their owner, even though many feel that the law was not quite clear on these issues.