Gambling and Lotteries

SECOND TO THE ILLEGAL trade in drugs, gambling and its ancillary crimes are a major source of income for organized-crime operations, which often spill over into white-collar crime. Organized-crime enterprises, from La Cosa Nostra to the Yakuza, rely heavily on gambling as a core operation, producing revenue on an ongoing basis.

The gambling operations lead to other aspects of their enterprise, such as loan-sharking and extortion. Gambling is best described as the opportunity to wager on some action in anticipation of correctly selecting the winner and receiving compensation in return.

Illegal gambling may exist in many forms and formats but is described by the United States Government in Title 18, U.S.C. Sec. 1955 as a business that: 1) is a violation of the law in the state in which it is conducted; 2) involves five or more persons who conduct, finance, manage, supervise, direct, or own all or part of such business; and 3) has been or remains in substantially continuous operation for a period in excess of 30 days, or has gross revenues of $2,000 in any single day.

The introduction of legal gambling opportunities (casinos, state lotteries, video poker, internet gambling, and legal sports betting) has not dried up the demand for illegal gambling operations. The continued success of illegal gambling operations may be due to the convenience factor, the higher odds, the absence of reporting to the Internal Revenue Service (IRS), the availability of credit, and the number of sporting events on which bets can be placed.

Proceeds from illegal gambling have in the past been associated with public corruption. In many cases public law enforcement officials have accepted payments form illegal gambling groups to operate. Recently, the governor of Louisiana was convicted on federal charges concerning corruption, some related[Page 345] to gambling. Some of the common operations are described below.