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Gaming Guru

Jennifer Borden
 

Online gamblers beware: Don’t let the government take your funds

16 April 2020

Be careful or the money inside your accounts could be turned over to the government.

Be careful or the money inside your accounts could be turned over to the government.

Attention online sports wagering and daily fantasy players: despite the fact that there is little to nothing that you can wager on right now, it doesn’t mean that you can forget about your online accounts. If you’re not careful, the money inside these accounts could be turned over to the government.

It has been almost two years since the Supreme Court of the United States found the Professional and Amateur Sports Protection Act unconstitutional. The federal law at issue dated back to 1992 and had effectively banned commercial sports betting in most states. Since the Court’s decision, sports betting has been legalized in 21 states and the District of Columbia. Of the jurisdictions that have legalized sports betting, roughly half allow for some form of online or mobile betting. Legislation to legalize sports betting is currently under consideration in 13 additional states and is scheduled to be included on November ballots in two more states.

The rise in sports betting legalization has not gone unnoticed by unclaimed property administrators. Coinciding with the legalization legislation, bills and regulations have been proposed in a number of jurisdictions to address the ultimate disposition of funds held in gamblers’ accounts that may become dormant at some point in the future. In simpler words, some states have in place ways to empty your individual online wagering accounts if you don’t pay attention to them. Talk about rubbing salt on the wound: imagine no money in your account, without the benefit of placing a bet!

Escheatment, the business term for the states taking control of assets when they are unclaimed by an individual, is most commonly thought of in relation to forgotten bank accounts, insurance policies and stock. Every state in the country can seize these assets if certain criteria for maintaining the accounts on the part of the individual are not met. It is then the responsibility of the individual to track down these missing funds and claim them back from the state. Not surprisingly, it will be more difficult to convince a state that you are “ParlayPaulie617” and be repaid your money, as opposed to simply logging into your password protected account and accessing your own funds.

How does this relate to sports wagering?

As noted above, a handful of states are beginning to address potentially abandoned sports betting accounts. Other states exempt game-play currency from their unclaimed property statutes, even when such currency is denominated in dollars. The majority of states, however, are still operating under outdated statutes written when virtual currency did not exist. The majority of states also require due diligence notices to be sent via first class mail. Therefore, it is unclear how meaningful due diligence could be conducted on abandoned online gaming accounts if the information required to establish an account is insufficient for the delivery of mail.

The injection of cash in state coffers has the potential to be significant. Sports betting in New Jersey reportedly yielded $4.58 billion in 2019. In January 2020, AB 567 was proposed to provide that amounts in online gaming accounts would be considered abandoned property after 3 years. If just 1% of those accounts are considered abandoned, New Jersey is in for an extra $45.8 million, thanks to lax bettors. Before closing the account, the casino licensee must attempt to contact the account owner. In Indiana, recently adopted regulations consider fantasy sports game participant accounts to be dormant if there is no activity in the account for 3 years. Game operators are also required to develop procedures to close dormant accounts. In Oregon, regulations adopted by the Oregon State Lottery Commission are less specific, indicating simply that a “funding account associated with an inactive player account may be considered abandoned.” Across the board it is not clear if a wager is required in order to consider an account active, or if the owner can merely log in to demonstrate activity.

It is not surprising that this new revenue stream has attracted the attention of unclaimed property administrators, since unclaimed property also provides substantial revenue to the states. Nevertheless, this may prove challenging from a compliance standpoint for holders going forward given the lack of uniformity in the treatment of intangible property under state law.

So to those who make wagers and hold accounts online, stay aware. Log into your account every now and again, even if you’re not making a bet, especially in the current environment where the sports you might typically wager upon aren’t happening. Because if there is an option for states to take control of abandoned accounts, they will.

That’s something you can bet on!

This article originally appeared on the blog section of the Borden Consulting Group, LLC website
Online gamblers beware: Don’t let the government take your funds is republished from Online.CasinoCity.com.
Jennifer Borden
A former state unclaimed property official, Jennifer is the founder of Borden Consulting Group, LLC and has specialized in unclaimed property law since 1994. She usually defends companies who are under audit and assists with owner outreach and annual compliance. The best part of the job is when she is able to help an owner recover money that was turned over to the state.
Jennifer Borden
A former state unclaimed property official, Jennifer is the founder of Borden Consulting Group, LLC and has specialized in unclaimed property law since 1994. She usually defends companies who are under audit and assists with owner outreach and annual compliance. The best part of the job is when she is able to help an owner recover money that was turned over to the state.