British gambling site operator pleads guilty to 'racketeering'
British gambling website operator BetOnSports plc has pleaded guilty in the United States to racketeering charges, prosecutors said.
US Attorney Catherine Hanaway’s office has been pursing a 22-count criminal indictment against the London-based company and its top executives since July.
Her office settled civil charges against BetOnSports in November, permanently barring the company from accepting bets from gamblers in the US
BetOnSports founder Stephen Kaplan and Chief Executive David Carruthers remain under arrest, and the company’s plea deal will not end their prosecution, Hanaway said.
Now that the legal case is settled and access to the US market is banned, BetOnSports is going out of business, said Jeffrey Demerath, a lawyer representing BetOnSports in St Louis.
“It is going to be wound up and closed down,” Demerath said.
BetOnSports had refused to send lawyers to criminal hearings in St Louis federal court, claiming that Hanaway had no authority to charge the foreign company, which took a majority of its bets from US customers but processed the wagers in Costa Rica and elsewhere.
“This plea constitutes a submission by the company to the US justice system,” Hanaway said in a statement. “This plea, combined with the terms of the civil junction, should put an end to the BetOnSports illegal gambling empire.”
The case has been closely watched by the online gambling industry, which generates about US $6bn (€4.46bn) annually in the United States.
BetOnSports is scheduled to be sentenced on October 19.
The company faces a fine up to $500,000 dollars (€37,200)) and possible forfeitures.
The company is also subject to a permanent injunction that requires it to repay wagers received from US gamblers held by the company as of June 1, 2006.
Hanaway agreed to drop any further criminal prosecution of the company. In return, BetOnSports must supply witnesses and evidence in the pending cases against Carruthers, Kaplan and some lower-level defendants in the company.
Kaplan has a detention hearing scheduled today before US Magistrate Judge Mary Ann Medler in St Louis.
Kaplan was arrested in March in the Dominican Republic and is charged with felony racketeering and fraud.
The charges were filed using a 1960s-era law known as the Wire Act, which prohibits placing bets on sports events over the phone.
Originally designed to crack down on mobsters, the law has become a tool for US prosecutors to charge offshore internet gambling operations.
Carruthers was arrested in July, shortly after Hanaway unsealed the criminal indictment against the company, which is publicly traded.
