“City Firms caught in FBI gaming inquiry” January 21, 2007
Over 16 investment banks, law and accountancy firms have been contacted by the US department of Justice for evidence connected with online gaming industry. These actions was all caused by the US president George Bush is passing a law that outlawed internet gaming in the US, which was viewed by other people as protecting United States’ best of interest. US have been contacting and getting any information they can get their hands on even extending their jurisdiction to UK. United States’ DOJ is trying to build a case against people who benefited from the industry and especially the ones who founded the online betting companies. Most banks are opened to cooperation with this worldwide operation on internet gambling. Following this operation, David Carruthers, the former chief executive of BetsonSports was arrested and Peter Dicks, the chairman of SportingBet, as well. This whole operation was motivated by the investment boom in the online gaming industry after companies in UK, when a lot of the individuals had benefited while the uncertainty over the legality of online gambling. NETeller is a payment processor for gaming industry and was arrested and charged for laundering billions of dollar and tax evasion. There would obviously be more actions following in the future, and would make the business for online gambling industry harder to operate in the US.
Relation to Chapter 3 – The Roles of Government
In chapter 3, we learnt about market imperfections, third party effects, unmet public goods, and distribution of income. A reason in why this problem happened was because of the lack of information. When individuals didn’t know about the legality of online gambling, the government took place and regulated on the gambling industry. They are finding all sorts of evidence that connected with the online gambling industry. Companies such as HSBC, JP Morgan, Credit Suisse, and Dresndner Kleinwort are issued with official requests for information. This also has a third party effect on United States’ economy. When everyone goes online gambling and real money is involved, during the uncertainty over the legality of online gambling, they didn’t have to pay any taxes for the money they won online. So many made a fortune from these websites and online gambling companies, because of the taxes that weren’t necessary to be paid to the government of US, they receive fewer income from the taxes revenue. This has a negative third party effect on the government itself because they can get more revenue and money from the taxes generated by gambling. Gambling is a really big industry and can usually help generate billions and billions of revenue. Those revenue can be used on other services such as military equipment or invest back into the economy in a certain way that helps the American citizens. Even though after this operation, the US might lose a lot businesses in the online gambling industry, but at least they will be able to receive billions of tax revenue that can be spent back into the economy for better use.
2 Comments:
Toby, nice blog man. Just wanted to comment on your blog. I agree totally on the lack of information given to the users of online betting sites. They believe they can just place bets without any consideration of the consequences behind online betting. Tax evasion is one of the most horrible acts toward the government. In Canada, this kind of incident isn't shown widely yet, but for sure the Canadian government will take action in preventing this kind of tax evasion. This money should be used to build on the health care system and education system that are in poor condition. Finally, nice template you got there, but the font is too small. I had a hard time reading the blog; maybe you should change the font. Overall, I like the feel to this blog, because of the cool template.
GJ Toby.
Stephen Sung
toby is cool, BUT NOT AS COOL AS KEEGAN!
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