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Illegal gambling businesses & organized crime: an analysis of federal convictions



Illegal gambling operations have been alleged to support organized crime and victimize participants, rather than benefit them. This is said to occur through cheating in the games provided, defrauding the government of tax revenue, and funding other illicit and criminal activities. What has been missing is a systematic analysis of actual cases involving illegal gambling businesses to determine precisely who is involved, how these businesses operate, the nature of the threat posed, and the law enforcement response to it. The analysis reported here examines all federal convictions involving operation of illegal gambling businesses during a single year. There were more than 80 persons charged and convicted of participation in illegal gambling businesses, centered around 40 distinct enterprises. The results indicate that illegal gambling businesses in the United States are long-term operations consisting of four general types, and that enforcement of existing laws, particularly related to illegal online sports betting, are not working effectively.
Illegal gambling businesses & organized crime:
an analysis of federal convictions
Jay S. Albanese
#Springer Science+Business Media New York 2017
Abstract Illegal gambling operations have been alleged to support organized crime
and victimize participants, rather than benefit them. This is said to occur through
cheating in the games provided, defrauding the government of tax revenue, and funding
other illicit and criminal activities. What has been missing is a systematic analysis of
actual cases involving illegal gambling businesses to determine precisely who is
involved, how these businesses operate, the nature of the threat posed, and the law
enforcement response to it. The analysis reported here examines all federal convictions
involving operation of illegal gambling businesses during a single year. There were
more than 80 persons charged and convicted of participation in illegal gambling
businesses, centered around 40 distinct enterprises. The results indicate that illegal
gambling businesses in the United States are long-term operations consisting of four
general types, and that enforcement of existing laws, particularly related to illegal
online sports betting, are not working effectively.
Keywords Illegal gambling .Organized crime .Illegal gambling businesses .On-line
betting .Offshore betting .Animal fighting .Racketeering .Money laundering .Extortion .
Loansharking .Forfeiture .Prosecution
The scope of illegal gambling is unknown. The last national estimate was made in
1999, and given changes in technology and in the availability of illegal gambling
opportunities, the extent has likely increased, but no one has yet measured its extent
nationally (National Gambling Impact Study Commission 1999). A case can be made
that individuals placing bets are not a major problem, because there may not be a
compelling public interest in how adults spend their leisure time, as long as they are not
hurting themselves or others.
Trends Organ Crim
DOI 10.1007/s12117-017-9302-y
*Jay S. Albanese
Wilder School of Government & Public Affairs, Virginia Commonwealth University, Richmond,
VA 23284, USA
A major problem arises, however, when looking carefully at those who are indeed
harming others. There have been numerous documented cases in which providers of
illegal gambling (e.g., illegal sports betting, black market machines, Internet sweep-
stakes cafes, and illegal online betting) have been found to cheat customers on payouts,
cheat the U.S. government by not paying taxes on profits, and using illicit profits to
support other forms of organized crime activity (Larson 2015; U.S. Department of
Justice 2015a; Womack 2015). In this way, illegal gambling operations support orga-
nized crime and victimize others, rather than benefit patrons. So it is the operation of
illegal gambling businesses, and their association with organized crime, that can
threaten their customers through cheating, defrauds the government of tax revenue,
and funds other criminal activities.
What has been missing thus far is a systematic analysis of actual cases involving
illegal gambling businesses to determine more precisely who is involved, how these
businesses operate, the nature of the threat posed, and the law enforcement response. To
fill this void, the analysis reported here examines in detail all federal convictions
involving operation of an illegal gambling business during a single year (2014). In this
way, the nature and extent of the connection between illegal gambling businesses and
organized crime can be documented through facts, rather than perceptions or anecdotes.
The status of illegal gambling businesses
Gambling in the United States is regulated by the individual states with the result that
nearly every state has legal lotteries and about half permit commercial casinos (Rose
2014). Nevertheless, most people do not live near a casino, wish to gamble in more
private locations or, most significant, they wish to wager on sporting events which is
permitted in only four states (Delaware, Nevada, Oregon and Montana), and there are
limits on the types of sports betting permitted. The general prohibition of sports
wagering in the U.S. under the Professional and Amateur Sports Protection Act
(1992), the Indian Gaming Regulatory Act (1988), and the Unlawful Internet Gambling
Enforcement Act (UIGEA) of 2006 has resulted in giving Nevada, and a very small
number of other locations, a monopoly on the legal sports betting business (Kelly 2011;
Morse 2007). The outcome has enabled organized crime elements using illegal gam-
bling businesses to prosper in catering to the demand for sports gambling not permitted
by law.
Players expect convenience, and the Internet has provided the forum to engage in
betting that is easy, accessible, provides access to the desired games and sports, and
makes payment and collection simple. Gambling businesses are crucial to the individ-
ual bettor because local bookmakers let players bet with credit, so cash is not needed
for every transaction. Working with a local gambling business also means bettors dont
have to provide credit card information or send money offshore. Most bettors Blike
dealing with real people and real cash.^So bookies direct bettors to a web site they are
affiliated with, and all bets are recorded and tracked. Therefore, the combination of the
local bookies gambling business, combined with Internet ease of access, the bookie
can Blog on and see who owes or is owed money in the coming week^(Borden
2012). There is a mutual attraction and convenience involved in illegal betting that
involves gambling businesses.
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Continuing controversy exists regarding the legal line drawn between legal and
illegal gambling, card games, fantasy sports, and these are being sorted out in a
combination of court decisions and state legislation (Dunphy 2014;Gambits2014;
Glanz et al. 2015; Trumbull 2011; United States of America v. Jimmy Hsieh et al.
2013). In the meantime, there is high demand for gambling, especially sports betting,
despite its illegal status most everywhere in the United States.
International experiences
Illegal gambling businesses have been documented in locations outside the U.S. In
China, for instance, following its economic reforms in 1978, illegal gambling has
become a major source of income for organized crime groups. The nature and types
of these operations are similar in structure to those found in the U.S. with a mixture of
local and regional gambling rings with online gambling networks (Wang and
Antonopoulos 2016). In Indonesia, cockfighting and board games are added to the
most popular forms of illegal gambling (Curnow 2012).
In India, the government has avoided the issue of internet gambling, so no specific
legislation exists. Online gambling businesses, both domestic and offshore, operate
without regulation or oversight, leaving unanswered the issues of taxation and enforce-
ment (Srikanth and Mattamana 2011). In Vietnamese cafés in southern California,
video games are used that can be switched to gambling machines via remote control,
enabling a flourishing and widely accepted, although illegal, business (Nguyen 2004).
As will be shown below, the international experience with gambling mirrors the U.S.
experience in that many of the games are the same, and either there are efforts to
regulate, no regulation at all or, in the case of many countries, the illegal status is
ignored by gambling operators and customers.
U.S. prosecutions resulting in convictions
Federal prosecutions resulting in convictions were used in this analysis to assess the
extent of illegal gambling operations for several reasons. First, the federal law against
gambling is clear, inclusive, and widely used. Under federal law, it is necessary that a
person Bconduct, finance, manage, supervise, direct, or own all or part of an illegal
gambling business.^The Illegal Gambling Business Act was enacted as part of the
Organized Crime Control Act of 1970. The Act was aimed to supplement other laws,
such as the Federal Wire Act, to target the sources of income to organized crime (Rodefer
2002). The Illegal Gambling Business Act is designed to assist states in enforcing their
laws regarding interstate gambling activities and is dependent on a predicate state
An illegal business is one that violates state law, and the illegal gambling
business must involve five or more persons. The illegal gambling business must remain
Bin substantially continuous operation^for more than 30 days or gross more than $2,000
in a single day. These are the three elements that must be proven to convict someone of
involvement in an illegal gambling business under federal law (Albanese 2015:417).
18 U.S.C. §1955.
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This federal law helps to distinguish gambling as a form of organized crime from
gambling that is recreational in nature. This purpose is made clear in the legislative
history of the law where Congress intended it to address Billegal gambling activities of
major proportions^in order Bto reach only those persons who prey systematically upon
our citizens and whose syndicated operations are so continuous and so substantial as to
be of national concern^(House of Representatives 1970).
Second, federal law permits both criminal and civil forfeiture of gambling proceeds,
which provides state and local law enforcement officials with incentive to pursue cases
under federal law, when some kinds of forfeitures are not available under state law
(King 2012;McCaw2011).
Third, all federal law enforcement agencies must use the U.S. Attorney, located in
each of the 94 federal judicial districts, to obtain indictments, convictions, and
sentences in criminal prosecutions. Therefore, whether the case originates with state
and local police, the FBI, Secret Service, IRS, Homeland Security, or other federal
agency, a federal prosecution must go through the U.S. Attorneysoffice,whichenables
the capture of the entire federal prosecution effort. A single year was chosen to get an
idea of what the universe of cases looked like over an extended period. Analysis of a
group of cases over a longer period, several years, would provide even broader
perspective on the nature, operation, and impact of illegal gambling enterprises.
The cases for this analysis were generated in three ways. Because there is no central
data source, a review of the website of each of the 94 U.S. Attorneys Offices were
searched to obtain announcements of arrests, and indictments and convictions which
were then sorted to determine the presence of illegal gambling businesses. To locate
additional cases, a Google news search was conducted over the period in question to
determine whether cases reported in the media were reflected in the U.S. Attorneys
survey. Third, a search using PACER (Public Access to Court Electronic Records) was
conducted, which permitted access to case information (indictments, pleas, sentencing
memoranda) from federal district and appellate courts. Searches using these three
methods made possible a thorough search for all cases involving illegal gambling
businesses. Identified cases were summarized and coded to insure that cases of illegal
gambling businesses involving multiple defendants were not double-counted.
Summarizing the prosecution effort
In total, there were more than 80 persons charged and convicted of participation in
illegal gambling businesses during 2014. These cases include federal prosecutions and
convictions in 23 states.
The breadth and scope of the operation of illegal gambling
businesses might be surprising given the corresponding scope of legal gambling
opportunities in the U.S., which includes 40 states that have some form of legalized
electronic gaming deviceincluding traditional slot machines, video poker and bin-
goat Indian casinos, commercial casinos, racetrack casinos, or other licensed
This project examines prosecutions under federal law, most of which were jointly investigated by local, state,
and federal law enforcement agencies. U.S. Attorneys Offices are located in each of the 94 federal judicial
districts across the United States. Their offices are responsible for prosecuting criminal cases in federal court
that occur within their jurisdictions.
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establishments. In addition, 44 states have lotteries of various kinds, and more than 500
legal casinos have been opened in the U.S. since the 1990s (American Gaming
Association 2016). Three states have legalized limited forms of on-line gambling.
Therefore, there clearly remains a large number of customers interested in gambling
that is not available in regulated venues, and these customers are served by illegal
gambling operations.
The more than 80 individual convictions for operating illegal gambling businesses
were centered around 40 distinct enterprises.
These illegal gambling businesses can be
grouped into four general types, which are summarized in Table 1.
Illegal on-line and offshore betting
It can be seen from Table 1that online and offshore betting was the most common type of
illegal gambling business, representing 38% of all (15 of 40) illegal gambling enterprises
that resulted in federal convictions during 2014. These were primarily sports-betting
enterprises that were operated using websites. Most of these websites were based in Costa
Rica, operating outside U.S. jurisdiction in an effort to evade the reach of U.S. gambling
laws. The average number of persons identified as being involved in the operating each
illegal enterprise was 13, indicating that these were not small enterprises. In addition, these
operations were found to work from U.S. locations in 10 different states.
Illegal gambling parlors and in-person games
A second type of illegal gambling business involved illegal gambling parlors and
games played in-person at establishments that included primarily illegal casinos, private
clubs, and illegal slot machines in bars or stores of various kinds. These businesses
were noteworthy for relying on patrons coming physically to their location to play
cards or slots. They represented 25% of illegal gambling businesses resulting in federal
convictions. On average, eight persons were identified as being involved in the
operating these illegal enterprises. Some of these locations also had connections to
illegal on-line Internet gaming sites located outside the U.S. These illegal gambling
businesses were located in 10 different states, many of which have multiple forms of
legal gambling available, indicating that there are many games and locations operating
outside the scope of existing legal gaming alternatives.
Illegal gambling as part of a larger organized crime enterprise
A third category of illegal gambling business involves those that were part of larger,
ongoing criminal enterprises. These enterprises involved both traditional and non-
traditional organized crime groups that have been found to engage in a wide array of
criminal activities that include operation of illegal gambling businesses. These ongoing
criminal enterprises included the Armenian Power Gang, Outlaws Motorcycle Club,
several families of the New York Cosa Nostra, a New York Chinatown gang, Russian-
As will be seen, some of these illegal gambling enterprises are quite large, but resulting convictions (mostly
guilty pleas) occur over a period of several years, so it is rare that all participants apprehended in an operation
are adjudicated in the same year.
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American organized crime group, the Philadelphia Cosa Nostra group, and a Texas
methamphetamine trafficking enterprise also engaged in operating illegal gambling
Illegal gambling operations by these groups is especially serious, because the profits
from illegal gambling are being used to fund other criminal activities, including
racketeering, money laundering, extortion and fraud. These were also found to be the
largest enterprises engaged in illegal gambling businesses with an average of 33
identified participants in each case. There were 10 identified illegal gambling busi-
nesses of this type, but given the large number of participants in each case, there were
more than 300 total offenders identified in these operations, making it the largest
number of individuals involved in illegal gambling operations of any type. These
operations were disrupted, resulting in convictions in eight different states.
Animal fighting and betting operations
The fourth type of illegal gambling business discovered was animal fighting and
betting operations. These involved either dog-fighting or cock-fighting and attracted
significant local followings. Five illegal gambling enterprises that involved animal
fighting were discovered in five different states, attracting customers from surrounding
states as well. An average of eight persons were identified in running each of these
illegal businesses, demonstrating they were not small operations. (Note that the appen-
dix provides examples of each of the four types of illegal gambling business.)
Features of illegal gambling businesses
This classification of four different types of illegal gambling businesses illustrates how
illegal gambling businesses are organized and operate. Further details about these enter-
prises can lead to an improved understanding and response in terms of prosecution and
Tab l e 1 Types of Illegal Gambling Operations
Type of Operation Business front Number of
Ave r age #
per ILGB
Number of states
where discovered
On-line & offshore
(Costa Rica)
15 13 10 - CA, CT, HI,
Parlors & in-person
Illegal casinos,
card clubs, slots
10 8 10 - CT, GU, ID,
Part of larger OC
Motorcycle gang,
LCN, Russian,
Armenian OC
10 33 8 - CA, CT, IN, MA,
Animal fighting &
Dog and cockfighting 5 8 5 - AL, GA, OR,
T N , W V, VA
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Table 2illustrates similarities and differences in the offenders and underlying
offenses involved in the operation of illegal gambling businesses. The offenses
charged, beyond operating an illegal gambling business (ILGB), most often involves
money laundering, RICO (a pattern of racketeering activity indicating an ongoing
criminal enterprise), conspiracy, and extortion. In cases involving larger ongoing
criminal groups, even more serious offenses occur, such as homicide and drug traf-
ficking. In the case of animal fighting, animal cruelty offenses are also charged.
It should be noted that three related offenses are connected to many illegal gambling
enterprises. First, the operation of an illegal gambling enterprise generates illegal income and
profits. These funds must be laundered through purchases, businesses, or banks to enter the
legal economy to evade detection of their illegal source, and this is where money laundering
charges are often connected to illegal gambling businesses. Second, extortion is associated
with illegal gambling businesses, because the collection of gambling debts sometimes results
in threats or force to collect them. These debts are not collectible through lawful means
(because these debts result from illegal gambling conduct and do not have legal standing in
court). Third, racketeering
(RICO) is often charged in these cases because illegal gambling
businesses are usually ongoing criminal enterprises, and RICO subjects them to extended
penalties if two or more felonies are committed within a 10-year period as part of an
enterprise. The federal racketeering law also provides for civil penalties and dissolution of
the enterprise itself. So it can be seen that money laundering, extortion, and racketeering are
the most common offenses to accompany the operation of illegal gambling businesses.
It is seen in Table 2that, where known, the average length of time those convicted of
operating illegal gambling business were involved in the business was between 4 and
11 years. This illustrates the ongoing nature of illegal gambling businesses. These are
not short-term operations.
The age of offenders convicted for involvement in illegal gambling businesses
ranged from age 32 to 79 with an average age ranging between 48 and 55 years old.
Therefore, most of those convicted of involvement are middle-aged offenders. These
are not the younger offenders, aged 18 to 25, which characterize most street criminals
who commit robberies and burglaries.
The law enforcement response
Understanding the nature of the law enforcement response is important as a way to
gauge success and ways to improve upon it in the future. This section will examine who
is conducting the investigations resulting in federal convictions, what investigative
methods are being used, the average prison sentence imposed, and assets seized
through forfeitures.
Table 3summarizes the law enforcement response to illegal gambling businesses.
Joint investigations involving state, local, and federal agencies resulted in virtually all
the federal convictions. This is because the primary investigative methods used (wire-
taps, undercover agents, and informants) involved police at different levels of govern-
ment. Informants and undercover work often occurs at the state and local level, whereas
RICO stands for Racketeer Influenced and Corrupt Organizations, which is part of the Organized Crime
Control Act of 1970 that created racketeering as a separate offense to provide extended penalties for ongoing
criminal enterprises.
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wiretaps, electronic surveillance and additional informants are often obtained at the
federal level. Therefore, joint investigations have shown success in prosecuting cases
involving illegal gambling businesses.
In terms of case outcomes, Table 3shows that prison sentences for those convicted
of operation illegal gambling businesses average 2 years. In animal fighting cases the
sentences are somewhat higher, due to the cruelty to animals and other offenses (e.g.,
drugs) often found to occur alongside the dog or cock-fighting. Illegal gambling
business cases that occurred as part of larger organized crime enterprises were much
longer on average (5 years), because these cases more often involved repeat and career
criminals. These cases were also more likely to involve extortionate threats and
violence. The longest sentences imposed were two life sentences, imposed in a Cosa
Nostra case and a Chinatown gang case because homicides were involved in ongoing
criminal activity.
Tab l e 2 Illegal Gambling Businesses: Offenses and Offenders
Type of Operation Offenses Charged
beyond ILGB
Average Age of
(range = 3279)
Average length
of time in
On-line &
offshore betting
Money laundering,
RICO, extortion
55 years old 7 years
Parlors &
in-person games
Money laundering,
conspiracy, RICO,
49 years old 4 years
Part of larger
OC enterprises
RICO, extortion,
money laundering,
homicide, drugs
53 years old 11 years
Animal fighting &
Conspiracy, animal
cruelty offenses
48 years old 4 years
Tab l e 3 The Law Enforcement Response
Type of Operation Investigation
Primary Investigation
On-line & offshore
Joint: federal,
state, local
Wiretaps, undercover
2 years $500,000 (up
to $20 M)
Parlors & in-person
Joint: federal,
state, local
Undercover police,
2 years $300,000 (up
to $1.3 M)
Part of larger OC
Joint or task
force: federal,
state, local
Wiretaps, informants 5 years $3 million (up
to $68 M)
Animal fighting &
betting (dogs &
Joint: state, federal
(+2 w/local law
Undercover police,
3 years $500,000 (up
to $900 K)
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Most significant in these cases against illegal gambling businesses was the substantial
forfeitures obtained. As Table 3illustrates, the majority of convictions resulted in forfeitures
averaging $500,000. Cases in which the illegal gambling business was part of a larger
organized crime enterprise averaged $3 million forfeited per case. Seizures in a number of
individual cases were substantially higher than this. These large criminal forfeitures
demonstrate the huge volume of cash generated by illegal gambling enterprises, none of
which is taxed, and much of it was used to fund other organized crime activity, such as
money laundering, loansharking, and other crimes. Of course, there is also likely rampant
cheating of customers, through rigged games and unfair payouts, but illegal gamblers
cannot complain, because they are participating in gambling enterprises operating outside
the law where there is no regulation or oversight, and complaints are not welcome.
Recommendations for the future
Size and operation The size and operation of these enterprises show that many are
large, involving an average of 8 to 33 participants in the operation. In addition, they
have been in operation for long periods of time (averaging 4 to 11 years). This points to
the large demand for gambling outside the law, and the corresponding development of
criminal enterprises to cater to this demand. Their large size and long-term existence
suggest that additional illegal gambling organizations exist to cater to the customer
demand, and that greater law enforcement focus on illegal gambling businesses would
likely uncover more of them. An analysis of cases covering a longer period of time
would bring more data to address this possibility.
On-line and offshore betting On-line and offshore betting is the largest category of
illegal gambling business found in this analysis. Many of these involved websites in
Costa Rica with management of the bettors and collections carried out by groups in the
U.S. This suggests that enforcement of existing laws, particularly related to illegal
online sports betting, may not be working effectively, and that regulation of gambling-
related activity across the world has direct U.S. impacts. Alternatives must be found to
insure that the methods by which gambling occurs are both legal and effectively
regulated (Kelly 2015;Laffeyetal.2016; Pontell et al. 2007). The current situation
permits illegal operators to skirt U.S. law without a great deal of effortwhich is
another reason to believe there are many more illegal gambling businesses not yet
detected. Identification of undiscovered illegal operations would require original anal-
ysis of local illegal gambling markets which would be a significant undertaking
involving neighborhood and police interviews, and perhaps an ethnographic approach.
Joint Law enforcement operations Virtually all the convictions analyzed here were
the result of joint investigations by state, local, and federal law enforcement agencies. It
would appear that dissemination of successful investigative methods, through training
other police agencies and task forces, may uncover more cases of illegal gambling
businesses. These task forces might ultimately pay for themselves, given the large
average forfeitures obtained in the cases found here. This is an empirical question
which could be answered in the future via analyses of the cost-benefit of task force
investigations against illegal gambling businesses. There is some existing research in
evaluating joint law enforcement operations involving drugs, gangs, and terrorism
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cases, but not illegal gambling businesses (see National Criminal Justice Association
2015; Plachta 2005; Rhodes et al. 2009;Spapens2011).
Forfeiture as punishment and prevention As shown here, the sentences for operating
illegal gambling businesses are not long, averaging 2 years in prison. However,
sentences increase dramatically when extortionate threats or other violence occurs.
Perhaps more important is that significant forfeitures in these cases make it difficult for
the illegal gambling enterprise to remain in business, or for offenders to get back into
business after serving a prison sentence. In addition to large amounts of cash, forfei-
tures in the cases analyzed here involved seizures of houses, condominiums, stores,
sports cars, and a strip mall. Criminal forfeitures might be an effective way to keep
illegal gambling businesses from resuming operations once convictions occur. Long-
term follow-up of the deterrent effect of forfeitures on offenders is needed (Smith
2004). The impact of forfeiture actions on policing has been assessed to a limited
extent, and the evidence thus far is mixed (see Cabana 2014; Kelly and
Kole 2016). Studies have not yet been done involving forfeitures from illegal gambling
This analysis of all federal court convictions for operating illegal gambling businesses
during an entire year shows that these businesses operated for many years, a large
volume of untaxed illicit profits was generated, and these profits were used to advance
other criminal objectives. A limitation of this study is that it is descriptive in nature, so
generalizations cannot be made without greater assurance of the extent to which these
cases reflect all illegal gambling businesses (and not only those prosecuted). In
addition, an analysis of cases over a longer period time (multiple years) would allow
for assessment of trends in both the nature of cases involving illegal gambling
businesses and the enforcement actions against them.
Of course, a primary purpose of social science is to establish causal relationships
(Donovan and Hoover 2014; Loseke 2013). In the case of illegal gambling businesses,
more certain knowledge is needed regarding the motivations of the offenders involved,
how different illegal gambling businesses are organized, and the extent to which
changes in law and law enforcement responses impact their incidence over time. These
questions require additional data involving interviews with principals, the impact of
prosecutions on offenders, their illegal gambling businesses, and on local illegal
gambling markets over time. A great deal of additional data, beyond that which is
currently known, will be required to begin answering these larger questions.
On the other hand, this study provides three important contributions. First, the
descriptive data reported in this study are organized into a typology of illegal gambling
businesses not previously reported. Second, the nature of the law enforcement and
prosecution response is described, revealing similarities and differences in handling 40
different illegal gambling businesses in 23 states. Third, this study helps to generate
new hypotheses to be examined with additional data in the future. For example, do the
nature of types of illegal gambling businesses found here constitute a typology that
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would hold up over time? Would the typology hold in assessing illegal gambling
businesses in other countries (see Wang and Antonopoulos 2016; Curnow 2012)? Do
the large forfeitures obtained in the cases reported here make it difficult for illegal
operators to get back into business after conviction? To what extent can and should
these forfeitures be used to fund future law enforcement efforts in this area? Are
different kinds of regulatory approaches more effective in reducing illegal gambling
businesses (Lycka 2014;Miers2016)?
The analysis presented here offers detailed, descriptive insights that future studies
might use as a basis to examine whether these findings are generalizable elsewhere and
over time. This will be important to determine, because as long as the demand for
prohibited forms of gambling remains, especially sports betting, it is likely that new
illegal operators will emerge to cater to this demand. It also remains to be seen whether
a regulatory solution will be created to legalize and tax sports betting as a way to more
effectively decrease the presence of illegal gambling businesses.
Compliance with ethical standards This study received funding from the American Gaming Association.
The views expressed are not necessarily those of the AGA. This article does not contain any studies with
human participants or animals performed by the author.Conflict of interest The author received research
funds from the American Gaming Association to carry out this research. The author declares that he has no
conflict of interest. The views expressed do not necessarily reflect the views of the AGA.
Summaries of typical cases involving 4 kinds of illegal gambling business
On-line and offshore betting
New York sports betting through multiple offshore websites An illegal gambling
operation in Rochester, New York was operated by three people, ages 32 to 66, who
took sports bets via multiple offshore internet gambling websites. The gambling
proceeds were transferred to an associate in Connecticut to conceal the source of the
funds. The money was then deposited into a credit line, which resulted in cash
withdrawals by the defendants. One of the operators told a bettor that someone would
physically harm him, if payment was not made on an extension of credit of $230,000.
This led to a charge of extortion. The offenders received sentences ranging from 3.5 to
9 years in prison in this case, plus forfeiture of $1.2 million, $20,000 on deposit in bank
accounts, a lakefront house, and $60,000 seized in cash (AttorneysOffice2014a,
2014a). This case illustrates the clear connection among the operation of an illegal
gambling business, the need for money laundering (to conceal the source of funds), and
extortion (to collect debts).
Connecticut offshore betting at with tribute paid to Gambino
family Twenty individuals were charged in a large Internet sport gambling business,
as well as some in-person, illegal card gambling clubs in Connecticut. Customers
placed bets using Internet sites, primarily based in Costa Rica.
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The operators collected losses and distributed winnings locally, and payments were sent
via Western Union to the website. Tribute (extortion) payments were collected from
individuals who ran their own independent sports gambling operations and a card club,
where a Brake^was collected from every hand playedpermitting them to operate in
territory controlled by the Gambino crime family of the Cosa Nostra. Several defen-
dants received prison sentences of between 1 and 5 years each. In addition, defendants
were required to pay a forfeiture amount, ranging from $40,000 to $300,000 each
(Gurliacci 2014; U.S. AttorneysOffice2012; U.S. Department of Justice 2014). This
illustrates overlap between in-person games and on-line betting, and the involvement of
established organized crime groups in seeking a piece of the action.
Parlors and in-person games
Violent gambling and loansharking ring in Philadelphia Eight individuals of
Albanian extraction ran an illegal gambling and loansharking ring, using three
Philadelphia bars and a pizza restaurant as fronts. The lead defendants, ages 35
to 49, were found guilty of racketeering, loansharking and extortion. The leaders
of the enterprise directed other members of the conspiracy, who served as
bookies and debt collectors. The loansharking activity was funded by profits
from the illegal gambling business. The group attempted to conceal their activ-
ities using coded language on the phone, conducting pat-down searches of
customers, and using cash in virtually all their transactions. The group cultivated
a reputation for violence by telling customers that if they did not pay their debts,
someone would kill them, break their legs, or physically harm them or their
family members. In one instance, a defendant placed a gun to a customers head
and threatened him with a hatchet. The group extended approximately 125
usurious loans for a total of $1.78 million with associated interest rates of
between 104 and 395%. They also used an online sports betting website which
contributed $2.9 million in profits to the illicit business. The principal defendants
received prison sentences of 12 and 14 years, respectively (Lattanzio 2013;US
Department of Justice 2015a,b). This illegal enterprise again shows the overlap
between in-person and on-line gambling businesses, and illustrates how the
illegal gambling operation provided the financial support for the loansharking
and extortion activities.
Gambling business in South Carolina with 300 video-poker machines Agambling
parlor in South Carolina had 316 stand-alone video-poker machines, constructed so that
the customer inserted cash into it, chose the amount to bet, and then watch the slot
machine reels. If the customer won, the machine printed a slip of paper which the
customer would take to the cashier for payment. The scheme was aided by a company
that provided software to keep track of transactions and payments, receiving a percent-
age of the gambling profits. The company would set up an entire internet cafe for a site
owner for between $50,000 and $80,000, depending on the number of machines
involved. Three pled guilty, including the company, and the defendants agreed to
forfeit $20 million, illustrating the huge monetary volume in profits obtained from this
illegal enterprise (Field 2014;U.S. Attorneys Office 2014b).
Trends Organ Crim
Gambling as part of larger organized crime enterprises
Armenian power gang in California More than 85 individuals were convicted for a
variety of crimes committed by members of the Armenian Power Gang, which was a
street gang formed in East Hollywood during the 1980s, consisting primarily of people
of Armenian descent. The crime charged included racketeering, bank fraud, identity
theft, debit card skimming, counterfeiting, and money laundering. Some defendants
were charged with extortion, drug trafficking, and operating an illegal gambling
business. The gang set up high-rolling illegal gambling tournaments in secret locations
in the San Fernando Valley. One member of the gang was sentenced to 13 years in
prison and forced to pay $3.5 million in restitution (Dobuzinskis 2011;U.S. Attorneys
Office 2014c). This is an example of illegal gambling businesses being operated by an
ongoing criminal enterprise involved in many other crimes and illicit profit-making
schemes, all of which is funded in part by the illegal gambling operation.
Russian-American organized crime group in New York The Taiwanchik-Trincher
Organization operated a high-stakes illegal sport gambling business that catered to
wealthy oligarchs in Russia. It also operated high-stakes illegal poker rooms around
New York City. Several U.S.-based defendants laundered $100 million in gambling
proceeds over 6 years through shell companies in Cyprus and into the U.S. Once back
in the U.S., the money was invested in legitimate real estate and investments. One
defendant was paid $12 million as a Bthief-in-law^to resolve disputes and make and
enforce threats. The defendants were charged with racketeering, money laundering,
extortion, as well as operating illegal gambling businesses. As of 2014, 28 defendants
had pled guilty, forfeiting more than $68 million (United States of America v.
Tokhtakhounov et al. 2013;U.S. Attorneys Office 2014d;2014e). Here again, it is
seen how larger organized crime enterprises use significant illegal gambling profits as a
way to commit other crimes and invest these illicit gains into the legal economy.
Animal fighting and betting
Cock fighting & betting: Big blue club in Tennessee and Virginia In a Virginia
case, which was typical of others of this kind, a private club in Kentucky called BBig
Blue^operated for years in which roosters were transported across state lines and
spectators and handlers came from 8 surrounding states to participate. Each person was
charged a $20 fee for a membership card, and this club had 5,000 members. Entry fees
for birds to fight were $250 and there were between 40 and 100 total entries per derby.
Entry fees for the BWorld Cha m p i o nship^in 2013 sold for $2,500 each. The couple and
their son who led the ring were sentenced to 10 to 18 months in prison, and the court
ordered them to forfeit $905,000, which was paid in part by seizing all their assets.
Three other participants in the ring received lesser prison sentences and forfeitures
(U.S. AttorneysOffice2014f;2014g).
Dog fighting & betting: Alabama and Georgia Eight individuals, ages 33 to 56,
from Alabama and Georgia were convicted of operating a dog-fighting ring for more
than 4 years. They were convicted of promoting and sponsoring dog fights, which
Trends Organ Crim
involved buying, selling, and transporting dogs for this purpose, and operating an
illegal gambling business so that customers could bet on the outcomes. Dogs were
abused, starved, and otherwise mistreated for the purpose of the dog fights. In dog
fighting, losing dogs are destroyed to keep the winning blood lines strong. It was
estimated that the defendants had injured or killed between 420 and 640 dogs during
the course of their operation. A total of 367 pit bulls were seized at the time of the
arrest. Customers bet a total of $5,000 and $200,000 on a single fight, averaging
$100,000 per fight. Illegal drugs and weapons were also exchanged during these
events. Eight defendants were sentenced to prison terms ranging from 2 months
to 8 years in prison with four of the defendants receiving prisons sentences of 3 to
8 years, respectively. Law enforcement seized $500,000 from those involved in the dog
fighting operation (White 2014;U.S. AttorneysOffice2014h;2015).
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Union. J Eur Publ Policy 23:14251441
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gambling businesses in Connecticut. District of Connecticut
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charges. Western District of New York
US Attorneys Office (2014b) Three plead guilty in gambling case and forfeit $20 million. District of South
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racketeering conspiracy. Central District of California
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Russian-American organized crime enterprise operating international sports book that laundered over
$100 million. Southern District of New York
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in gambling ring. Southern District of New York
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Trends Organ Crim
... There are no estimates regarding illegal gambling behaviors worldwide (Albanese, 2018;Sukhanov et al., 2018). The extensive studies on people engaging in problematic gambling almost do not address the differences between legal and illegal gamblers (Berger, 2015;Lotzin et al., 2018). ...
... The extensive studies on people engaging in problematic gambling almost do not address the differences between legal and illegal gamblers (Berger, 2015;Lotzin et al., 2018). Most of the literature and research on illegal gambling focus on the connection between illegal gambling and organized crime (Albanese, 2018;Wang & Antonopoulos, 2016) or on policy and socio-historical analysis of gambling legislation (see, for example, Evans, 2015;Vaz, 2014). ...
... The objectives of this study were to examine the characteristics of illegal gamblers and determine whether they displayed more frequent and severe gambling behaviors, and had greater motivation to gamble and use substances than did legal gamblers. Although the estimation of illegal gambling behaviors worldwide is unknown (Albanese, 2018;Sukhanov et al., 2018), the findings of the current study show that one-eighth (13%) of the gamblers who participated in the study reported illegal gambling in the preceding year. It is reasonable to assume that because of the nature of illegal behavior, participants may have under-reported illegal gambling behaviors. ...
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Little is known about people who gamble in illegal settings, and the extent of differences in gambling behavior between legal and illegal gamblers is unclear. The present study examined the characteristics of illegal gamblers and whether they engage in more frequent and severe gambling behaviors, and demonstrate greater motivation for gambling and substance use than legal gamblers. A cross-sectional online survey recruited 1251 people who gambled in the preceding year, of whom 13% (N = 161) participated in illegal gambling. Significant differences were found in gambling behaviors between illegal and legal gamblers in all outcomes examined. People who participated in illegal gambling reported more frequent participation in almost all types of legal gambling, more types of “multi-bets,” more severe and high-risk gambling behaviors, higher motivations to gamble, and higher frequencies of substance use than those who engaged in legal gambling. Logistic regressions revealed that the stronger associations with illegal gambling were among problem gamblers (OR = 17.80; CI 9.21–34.4; p < 0.000), among the age group of 29–41 years (OR = 6.16; CI 3.15–12.3; p < 0.000), among moderate-risk gamblers (OR = 5.54; CI 3.42–3.42; p < 0.000) and among secular individuals (OR = 4.11; CI 1.73–9.77; p ≤ 0.001). A comprehensive gambling policy is needed in Israel to address illegal gambling. The policy should attend to harm reduction, treatment, prevention, and enforcement. Additionally, more studies are needed to examine gambling behavior and other risk behaviors of illegal gamblers.
... Currently, the global gambling industry is estimated at around 227 billion USD [1], and the online illegal gambling market has increased proportionately to other entertainment industries. Illegal gambling is defined as all forms of gambling not authorized by a given user's country and consists of illegal sports gambling, black market slot machines, and illegal online gambling [2]. Gambling industry profits are often used to run various leisure services such as ski and golf resorts and contribute to the national revenue and related industry sectors. ...
... In addition, set return_sequences = True, so the output will still be a sequence. TimeDistributed(Dense(X_train.shape [2])) is added at the end to get the output, where 2 is the number of features in the input data. ...
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During the past decade, the technological advancement have allowed the gambling industry worldwide to deploy various platforms such as the web and mobile applications. Government agencies and local authorities have place strict regulations regarding the location and amount allowed for gambling. These efforts are made to prevent gambling addictions and monitor fraudulent activities. The revenue earned from gambling provides a considerable amount of tax revenue. The inception of internet gambling have allowed professional gamblers to par take in unlawful acts. However, the lack of studies on the technical inspections and systems to prohibit unlawful internet gambling has caused incidents such as the Walkerhill Hotel incident in 2016, where fraudsters placed bets abnormally by modifying an Internet of Things (IoT)-based application called “MyCard”. This paper investigates the logic used by smartphone IoT applications to validate the location of users and then confirm continuous threats. Hence, our research analyzed transactions made on applications that operated using location authentication through IoT devices. Drawing on gambling transaction data from the Korea Racing Authority, this research used time series machine learning algorithms to identify anomalous activities and transactions. In our research, we propose a method to detect and prevent these anomalies by conducting a comparative analysis of the results of existing anomaly detection techniques and novel techniques.
... It is noted that unfair incomes are mostly used for various organizational activities, mainly for the financing and distribution of drugs. Albanese (2018) in the research "Illegal Gambling Businesses and Organized Crime: An analysis of Federal Convictions", states that illegal sports betting organizations do not pay their customers through various frauds and use their earnings to support organized crime activities. ...
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All kinds of criminal betting activities that are played over sports competitions by using digital technologies without the permission of the authorized institutions are considered as illegal betting. In the formation of illegal bets, legal violations due to illegal structuring and activities, and economic violations in terms of providing untaxed unfair profits draw attention. The perspectives of those working in the field gain importance in the evaluation of the criminal, economic, psychosocial and communication dimensions of illegal bets. The aim of this qualitative study is to reveal a determination about illegal sports betting in line with the opinions of the expert police officers working in the Istanbul Police Department Anti-Cybercrime Branch. The results of the operations carried out for illegal sports betting between 2017-2020 are also used as the supporting data of the research. In the study, illegal sports bets were evaluated with the semi-structured in-depth interview technique based on the descriptive method, with the data obtained from the expert police. With the literature review and expert police interviews, important data were obtained about the methodology and communicative paradigms of the impact of illegal sports betting crimes on individuals and society. In this context this original research, evaluated from the perspective of cybercrime experts, makes a contribution to the literature. Öz Yetkili kurumlardan izin alınmaksızın, bilişim teknolojileri aracı kılınarak spor müsabakaları üzerinden oynatılan ve konusu suç teşkil eden her türden bahis eylemi, yasadışı bahis kapsamında değerlendirilmektedir. Usulsüz yapılanma ve faaliyetleri nedeniyle hukuksal, vergilendirilememiş haksız kazanç sağlanması yönüyle de ekonomik ihlaller, yasadışı bahislerin oluşumunda dikkat çekmektedir. Yasadışı bahislerin kriminal, iktisadi, psikososyal ve iletişim boyutlarının değerlendirilmesinde, sahada görev alanların perspektifleri önem kazanmaktadır. Bu nitel çalışmanın amacı İstanbul Emniyet Müdürlüğü Siber Suçlarla Mücadele Şube Müdürlüğünde görevli uzman polislerin görüşleri doğrultusunda, yasadışı spor bahisleri hakkında bir tespitin ortaya konulmasıdır. 2017-2020 tarihleri arasında yasadışı spor bahislerine yönelik gerçekleştirilen operasyon sonuçları da araştırmanın destekleyici verileri olarak kullanılmaktadır. Araştırmada yasadışı spor bahisleri; betimsel yöntemle dayalı yarı yapılandırılmış derinlemesine mülakat tekniğiyle, uzman polislerden elde edilen verilerle değerlendirilmiştir. Literatür taraması ve uzman polis görüşmeleriyle, yasadışı bahis suçlarının birey ve toplum üzerindeki etkisi, metodolojisi ve iletişimsel paradigmaları hakkında önemli verilere ulaşılmıştır. Bu bağlamda siber suç uzmanları perspektifiyle değerlendirilen bu özgün araştırma alanyazına bir katkı sunmaktadır.
... The growing cryptocurrencies market brings up another significant regulatory challenge (Brito et al., 2014). Foley et al. (2019), for example, show the significant amount of illegal activities related to the use of cryptocurrencies, a problem that gambling regulators know as well (Potenza et al., 2000;Spapens, 2014;Albanese, 2018). Especially when it comes to money laundering, both markets face significant challenges (Wechsler, 2001;Levi and Reuter, 2006;Buchanan, 2018). ...
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This article discusses similarities between the finance industry and the gambling industry. It considers empirical studies from both fields and compares both industries with regard to possible substitution effects. Afterwards, the current regulatory approach to gambling and financial markets is discussed. Based on this literature review, the author points out that regulators need to acknowledge the fact that both markets possess addictive properties and attract certain risk-seeking individuals. Moreover, the regulators need to find a way to align their fundamentally different objectives to find common solutions to cross-industry problems. Finally, an increased cooperation between (state) authorities is necessary. This cooperation could help to protect traders from developing gambling-related problems, provide significant insights for industry-wide and product-specific regulation and lead to a more informed use of technology for harm prevention purposes. The most important similarities and differences of both markets and the resulting regulatory implications are briefly summarized.
... Traditional forms of gambling include number bets, horses and dog racing, sports and card games. Albanese (2018) distinguished different types of illegal gambling. One such activity involves animal fighting and betting on dogs and cocks for high stakes. ...
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In recent years there is increasing public attention for dog fighting in Europe. This article focuses on this phenomenon in the Netherlands: its organisation, various actors, modus operandi and possible involvement of organized crime. This qualitative research is based on semi-structured interviews, analysis of police files, observations and online methods. As the result of criminalisation, dogfighting in the Netherlands went underground, creating an illegal market and a sub-culture of dogmen and dogwomen involved. Reputation, status and trust are among the most prominent features of this sub-culture, which is manifested in their analysed communications.
Purpose Despite all the anti-corruption measures and anti-corruption initiatives, people offer or accept bribes without any hesitation. As anywhere in the world, the negative consequences of corruption lead to a reduction in direct investment, increase inequality and poverty, distort and use public investment and reduce public revenues. The purpose of this article is to study the criminological measures to counteract corruption offences in the field of illegal gambling. Design/methodology/approach The methodological basis of the study is the provisions of the theory of knowledge: the laws of dialectical materialism, philosophical categories and scientific principles of cognition of social and legal reality. Findings Although many components of foreign state anti-corruption programmes are quite problematic to apply in modern realities in the Republic of Kazakhstan, according to legal scholars, through gradual implementation into the legislation of the Republic of Kazakhstan because of the systematic improvement by the state of the content of regulations and responsible implementation of anti-corruption strategies. In this regard, one of the conditions in the fight against corruption is actions aimed at using the best practices of countries that are similar to each other in terms of religion, habits, traditions, ethics and morality. Originality/value Anti-corruption initiatives using information and communication technologies, such as digital public services and e-government, crowdsourcing platforms, tools for exposing, transparency portals, blockchain and artificial intelligence technologies can provide significant assistance in combating manifestations of corruption in the field of illegal gambling on the internet in the Republic of Kazakhstan.
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This article provides an introduction to the special issue of Trends in Organized Crime on ‘Organised Crime and Animals’. The special issue contributes to the criminological literature on organised crime, new illicit markets and green criminology. The articles in this special issue offer a wide range of empirical evidence, criminological analysis and theoretical explorations of the various connections between organised crime and animals, including the illegal wildlife trade, gambling on animals, puppy trafficking, the killing of wolves and illegal, unreported fisheries and the regulatory and enforcement responses to these phenomena.
Purpose This paper aims to provide a holistic view of infiltration behaviour by organised crime groups (OCGs), with a specific focus on the methods used to access the legal market, including factors that drive an organised crime group to pursue infiltration. The act of infiltration is examined as a business decision; therefore, factors such as the surrounding community, the availability of criminal opportunities and broader implications, are considered. Design/methodology/approach Initially, the concept of an organised crime group is explored by, where possible, identifying trends in behaviour and structure. The act of infiltration is dissected, including the infiltration behaviour of OCGs and their related decision-making processes. Findings Infiltration actions are complex; therefore, any countervailing combatting and preventative actions will need to follow suit. OCGs pursue infiltration only when deemed feasible and to their benefit in furthering their illicit actions. Criminal opportunities are pursued across the entire economic sector. When these groups participate in a legal market, their criminality infects the healthy market and leaves it ill and contagious to the rest of the licit economy. Originality/value Infiltration is organic, as it indicates growth or adjustment to changing market conditions. Criminal opportunities are widespread, and their creation is often unintentional–the legal economy casts a shadow. Combatting organised crime, entrenched in the lawful community, requires that the focus should be on the susceptibility of potential infiltration targets through the possible infiltration methods. Furthermore, a broader perspective is needed when considering the underlying motivation for infiltration–it may not only be to generate profit.
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The recent economic crisis has brought into focus how even open and highly interdependent economies in the European Union try to govern their economies according to territorially defined interests. The aim of this article is to examine an area, online gambling, with the technological and legal conditions that challenge approaches that favour economic patriotism. The article compares two cases, the United Kingdom and Italy, that represent two different models of economic governance to argue that they are similar in which interests they seek to protect and at which level.
Organized Crime: From the Mob to Transnational Organized Crime provides readers with a clear understanding of organized crime, including its definition and causes, how it is categorized under the law, models to explain its persistence, and the criminal justice response to organized crime, including investigation, prosecution, defense, and sentencing. This book offers a comprehensive survey, including an extensive history of the Mafia in the United States; a legal analysis of the offenses that underlie organized crimes; specific attention to modern manifestations of organized crime activity, such as human smuggling, Internet crimes, and other transnational criminal operations; and the application of ethics to the study of organized crime
Since China initiated its economic reforms in 1978, illegal gambling has become the primary source of revenue for organized crime groups. However, there remains a startling paucity of literature on the subject. This paper provides the first scholarly account in English of Chinese illegal gambling organizations and examines how three major types of enterprising entities (local gambling dens, trans-regional gambling rings and online gambling networks) mitigate external uncertainties. Using Chinese- and English-language sources, it explores how gambling organizations develop strategies to achieve optimal efficiency in the face of substantial challenges, including finance, marketing, debt collection, and police suppression.
Over the last few years, the international community as well as States have committed themselves to improving mechanisms for preventing and repressing money-laundering and for confiscation, in particular in the context of organised crime. In spite of this standardising effort, in several national systems the level of application of the offence of money laundering by judges and courts is less than satisfactory. Existing legal mechanisms aimed at confiscating assets of criminal origin are not giving the expected results. The intended aim of this work is to put forward solutions to the practical challenges in order to help legal measures being effective in practice, taking into account the differences between national legal cultures. In order to define the topic, after an introduction to the difficulties of implementing international standards, the paper focuses in particular on overcoming internal obstacles, not on aspects relating to international cooperation.