that broader funnel is exactly why money-flow scrutiny becomes inevitable. He also flags that prosecutors may increasingly look at this space through a financial-crime lens.


In February 2026, SDNY U.S. Attorney Jay Clayton publicly signalled (at a Securities Enforcement Forum in New York City) that his office is actively looking at prediction markets and expects to bring fraud prosecutions in that space.


REGULATORS DON’T PUT YOU IN JAIL


One of Pellegrino’s sharpest distinctions is between regulatory risk and criminal prosecution risk, and his belief that many fast-moving tech-led businesses over-index on the former. “Generally speaking, regulators can’t put you in jail. Tey have the power to enjoin and the power to fine,” he said. “When your focus is solely placed on regulators, you’re not focused on criminal law.” His warning for gambling businesses experimenting with new payment methods, wallets, or event- trading mechanics is that a company can feel fine right up until it isn’t, and that the trigger is often a single, high-profile incident that forces public and political attention.


Importantly, Pellegrino doesn’t frame the biggest risk as crypto itself. Instead, he focuses on how firms handle who is on their platform, where funds originate, and whether warning signs are acted upon. In the US, he notes, companies can’t rely on “we didn’t know” if the facts suggest they chose not to know. In his words, the legal system recognises conscious avoidance - the idea that burying your head in the sand is not a defence. Tat’s why he urges businesses to treat modern wagering platforms, especially those touching crypto rails, as closer to banking and payments than ‘just gaming.’ Te compliance expectations, he argues, should rise accordingly. “Operators need to be aware that they’re entering a very traditional space - banking and finance. And there’s almost no more highly regulated space on the planet.”


WHAT GOOD LOOKS LIKE WHEN THE BLACK SWAN HITS


Pellegrino’s most practical guidance to avoid prosecution is about building defensibility before the crisis arrives. In his view, a robust programme does two things at once: 1. Reduces the chance that illicit flows enter the platform; and 2. Improves the company’s posture if authorities come


102


knocking - by showing controls, governance, and a credible culture of compliance.


He emphasised the importance of top-down tone, documented procedures, and the ability to cooperate quickly—because in the earliest days of an investigation, authorities tend to decide whether a business looks like a “good actor” or a “bad actor”.


WHISTLEBLOWERS, EVIDENCE TRAILS, AND WHY EMAIL WILL KILL YOU


Another thread that will resonate with compliance leaders: whistleblowers and internal escalation. Pellegrino argues that modern cases are often made not by a single transaction, but by the internal record, especially communications showing that staff raised concerns and leadership dismissed them. He describes two archetypes: the problem employee who complains about everything, and the legitimate whistleblower who flags a real risk (shouldn’t we be doing more?). Either way, his advice is the same: have a formal intake process, investigate, and document outcomes (substantiated or unsubstantiated).


Why? Because in any serious investigation, all comms will be seized, and the absence of process can look like indifference.


OFFSHORE ISN’T A SHIELD – SDNY’S REACH IS GLOBAL


Finally, Pellegrino pushed back on the idea that offshore structuring is a reliable escape hatch. Yes, some jurisdictions make corporate structuring easier. But he stressed that enforcement is increasingly cross-border, and that U.S. prosecutors, especially SDNY, often take an expansive view of jurisdiction where minimal U.S. touchpoints exist (for example, transactions routing through U.S. financial infrastructure or communications that transit U.S. systems).


Te practical takeaway for gaming groups operating across multiple jurisdictions: domestic vs offshore is not the right framing. Te risk profile follows the money flow. With the IAGA Summit convening senior legal, regulatory, financial and operational leaders, the conversation in Sarasota looks set to focus less on hype, and more on the hard truth of modern payments: if you move money at scale, you inherit banking- grade scrutiny.


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