California Bill Makes It Easier to Seize Profits from Illegal Gambling

Posted on: August 24, 2019, 02:58h. 

Last updated on: August 24, 2019, 01:28h.

Ed Silverstein @casinoorgedsilv Read More

Expertise: Legal, Tribal Gaming.

Ill-gotten gains from illegal California organized gambling activities will have a better chance of getting seized by local authorities under a bill that recently passed the legislature — and could be a model for legislation in other states.

Now awaiting the signature of Gov. Gavin Newsom, a Democrat, Assembly Bill (AB) 1294 improves the ability of the California Department of Justice and local law enforcement to seize money in the bank accounts of those convicted of illicit gambling operations. It allows authorities to seize other assets from the criminals, too.

The bill — written by Assemblymember Rudy Salas (D-32) and Senator Tom Umberg (D-34) — would update state Penal Code section 186.2 to expand the definition of “criminal profiteering activity.” It would include operation of illegal slot machines and gambling devices. Currently, the law only applies this definition to bookmaking crimes.

“AB 1294 will have a substantial impact [on] illegal gambling by cracking down on the profits of the criminal operators who are running illegal sweepstakes cafes and underground casinos,” Salas told Casino.org.

“Currently, illegal gambling sites are opening up faster than law enforcement can shut them down,” Salas added. “The reality is illegal gambling machines are so profitable that operators simply treat closures as a small cost of doing business and will simply relocate elsewhere.”

Salas explains the bill cuts off “convicted operators from their money through forfeiture proceedings, which will make it harder for them to rapidly open up new illegal sites.”

The Kern County sheriff’s office says that crime rates can increase tenfold around the location of an illegal gambling operation, Salas said. Umberg, a former prosecutor and one-time Deputy Director of the White House Office of National Drug Control Policy, said these gambling operations can directly or indirectly be tied to drug abuse and assault. Human trafficking and various forms of organized crime are a related concern, too, Salas said.

Currently, most of those arrested for operating illegal gambling activities in California are only charged with misdemeanors. The operators typically are fined a few thousand dollars.

But gambling arrests take place throughout the state. In April of last year, Bakersfield police arrested 51 suspects at internet casinos and other businesses with illegal electronic gaming devices, Salas said. Recently, in Santa Ana, 21 suspects were charged and 19 illegal gambling machines were seized at a cyber cafe, Salas said. Also, last month three suspects were arrested after police in Long Beach disrupted an illegal gambling operation being run out of a residence. Gaming machines, weapons, ammunition and cash were seized.

Earlier this year, authorities in Orange County broke up illegal gambling rings in Buena Park and Santa Ana, while the Los Angeles Police Department took down an unauthorized gaming establishment in Koreatown in March.

Over 14 months, the Kern County sheriff’s office raided 100 illegal gambling sites and found AK-47s, prostitution, and illegal drugs, Salas recalled.

California Police Support Bill

Among those supporting Salas’ bill is the California Police Chiefs Association. “The … association is proud to support AB 1294 and would like to thank Assembly member Salas … for giving us the opportunity to do so,” association President Ronald Lawrence — who is also police chief in Citrus Heights — told Casino.org.

“California’s gambling industry has become the main economic driver for some parts of the state,” he said about legal gaming in the state. “Legitimate gambling establishments provide the necessary tax revenues needed to provide essential services and have helped bolster local economies.

“AB 1294 will assist law enforcement in their efforts to disrupt illegal gambling activity which may negatively impact the communities we serve,” Lawrence adds.

When reached for comment on the bill, CEO of Clovis Quantum Solutions Annemarie McAvoy, a former prosecutor who specializes in financial crime compliance and teaches courses on financial crimes at Columbia University’s School of International and Public Affairs, told Casino.org that the California legislation “will increase local law enforcement’s ability to seize funds from those running [illegal] gambling operations, thus helping to deter such activity.

Since gambling often brings with it other criminal activity …, this may help to reduce crime significantly,” McAvoy said. “Other states will hopefully follow suit, as forfeiting funds under existing state laws is often very difficult, if not impossible, to do.”

Nationally, illegal gambling — which includes electronic slot machines and arcade-style games — generates more than $10 billion a year in ill-gotten gains, according to estimates from the American Gaming Association, Salas said.

McAvoy explained that forfeiture of proceeds of illegal activities, including gambling, is “one of the most powerful tools law enforcement can use to stop criminals.” By taking away the profit motive, operators lose the incentive continue that criminal activity, she said.

“Up until now, criminals often looked upon their possible relatively short prison stays for gambling as a cost of doing business and knew that their illicit proceeds would be waiting for them when they got out,” McAvoy explained. “Many were simply charged with misdemeanors and given a small fine, and were thereafter able to enjoy the funds they had gotten from illegal gambling.”

Bill Improves Chances for Forfeiture

But the measures under AB 1294 go beyond current forfeiture laws. “Existing law allows for taking forfeiture actions against the proceeds of ‘criminal profiteering activity,’” Salas explained.

“However, the current definition of criminal profiteering activity is somewhat outdated, and only applies to bookmaking crimes and does not extend to illegal slot machines or illegal gambling devices.”

The bill updates the definition to include the machines often found in sweepstakes cafes and illegal casinos, he adds.