Illegal online gambling allegedly enabled with prepaid cards

On April 15, 2011, the United States Attorney for the Southern District of New York revealed that three of the largest online poker companies, their associates and payment processors were indicted on charges of fraud, illegal gambling and money laundering. One way that illegal gambling activity was allegedly facilitated was through the use of prepaid cards.

Among those named in the indictment were operators of the Internet poker sites PokerStars, Full Tilt Poker and Absolute Poker. The charges were brought under the Unlawful Internet Gambling Enforcement Act of 2006, which made it a federal crime for U.S.-based processors to knowingly process most Internet gambling payments. U.S. poker sites relocated offshore and began looking for ways around the new regulations soon after the act became law.

The grand jury indictment described the ways the accused were allegedly able to coerce banks into processing gamblers' poker payments for the Internet sites. One way was via prepaid cards. Customers were apparently able to load gift and phone cards using credit cards and then use the prepaid cards to pay gambling debts without alerting authorities. The poker sites created fake websites and phony consumer reviews to make these cards appear legitimate, the indictment said.

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