I agree with your assessment.
Plus, I'm thinking they mught not have been able to tax off shore winnings. I would appreciate someone who KNOWS for SURE whether the U.S. has/had the ability to tax off shore winnings to comment on this.
It has been my understanding that if you are a U.S. citizen, every dollar you acquire, by whatever means, onshore or offshore, is reportable and taxable as income excluding only certain tax-deferred investments and profits from real estate sales up to a cap.
So, it's not illegal to have an offshore accout; it's illegal to have one and fail to report your interest income. If you go to Monaco and win $1M, that's not illegal, but you must report it when you file your taxes. The local government will take their pound of flesh at the point of payment; reporting to the IRS is your job.
Now, you could always return via Grand Cayman, land in the U.S. sans capital, and leave some unnamed bank in Grand Cayman with a hefty new, numbered interest-earning account, but -- technically, at least -- you still have to report everything. Some things are nearly impossible for then to discover if you DON'T report them, BUT, if you don't report them and they DO discover them...you're TOAST.
But, then, I think you implied that you're somewhat of a gambler... ;-)
Heck, gambling via the 'options' and 'futures' markets has been a given for many, many years. The difference is the govt can monitor that activity much easier and ensure that they 'get their cut'.
The U.S. can tax any income above a certain level. Gambling winnings are generally considered income, on or off-shore. However, it would be difficult for the U.S. to track such winnings, as they wouldn't be reported to the IRS as such winnings are inside the U.S.
Thus Congress, ever the conservative institution, determined that since it couldn't guarantee under WTO rules it would be able to continue wetting its beak, better to pretend to social conservatism and ban the whole thing, sending the gamblers to unregulated bookies and regulated casinos.