BetonSports PLC needs a wing and a prayer...and a miracle from God

First, nearly every big name that has served in the company from 2002 through 2005 gets indicted.  Next, BetonSports PLC abruptly halts trading as its counterparts shares continue to plunge.  Then, effective Tuesday night, BetonSports website shuts down with a message that "no wagering transactions can be executed" in light of the current indictments.  Then of course there is the situation involving BetonSports.com's British CEO who sits in a Dallas prison awaiting transfer to a court hearing in Missouri Tuesday.

Many experts surmise that unless BetonSports PLC can pull a rabbit out of their hat (perhaps turn state evidence in against founder Gary Kaplan, the obvious "big fish" target here) and offer to settle financially with the US government, this company is done.

The US government has already pressed forward a civil suit against the company, asking for BetonSports.com to cease taking bets from US citizens.  BoS appears to have already complied.

BetonSports, a London-listed online gambling group, is accused of being at the center of a multibillion-dollar illegal gambling operation, according to a grand jury indictment which charges the company and a number of its principals with violation of the Wire Act, racketeering, conspiracy, fraud and tax evasion.

Other Company Websites Still Up

Websites belonging to BetonSports.com still remained up as of Tuesday evening with only the main BetonSports.com site providing the ominous message:

IN LIGHT OF COURT PAPERS FILED IN THE UNITED STATES, THE COMPANY HAS TEMPORARILY SUSPENDED THIS FACILITY PENDING ITS ABILITY TO ASSESS ITS FULL POSITION. DURING THIS PERIOD NO FINANCIAL OR WAGERING TRANSACTIONS CAN BE EXECUTED. FURTHER INFORMATION WILL BE POSTED ONCE THE COMPANY IS IN A POSITION TO DO SO.

The BETonSPORTS.com customer support team

More than 1000 mostly Costa Rican employees are expected to be out of work indefinitely until this matter can be resolved, if it can be resolved at all.

The MVP Sportsbook website also remains up with a graphic that provides information on how bookmakers operating from the US can have that company manage its business for a "per head" payment. 

The US government has expressed serious displeasure with these types of organizations over the last two years, singling them out for money laundering and organized criminal indictments, including a business that was run from the BetonSports.com facility.

BetonSports.com CEO has always been an avid reader of Gambling911.com

Customers, Shareholders Concerned as Lawyers Sort Things Out

Thousands of online gambling customers of BetonSports.com remained in the dark Tuesday night wondering what might happen to their funds.  Some players are estimated to have five figure balances at the company, though a number of professionals were spared after being booted from BetonSports this past month along with their deposits.

Gambling911.com, which had pulled all BetonSports.com ads prior to the end of their one year campaign last month, did so partially as a result of the "bad press" generated from reported "account confiscations".  Gambling911.com management was expected to finalize a "renewal" agreement this week before the site suspended the campaign indefinitely on Tuesday morning.

"Gambling911.com was in no position to allow BetonSports.com back onto the website as an advertiser," commented Marketing Director Payton O'Brien.  "While translating the 1960's 'Wire Act' can be left open for various interpretations, the indictment also mentions that BetonSports.com had engaged in accepting wagers on US soil via a mobile vehicle provided by a marketing firm and this is clearly a violation of Gambling911.com policy."

As of Tuesday night, Gambling911.com management urged customers of BetonSports.com to remain vigilant and patient. 

"Remember, this is a publicly traded company out of London in otherwise 'good standing' outside of this indictment by the United State Justice Department," O'Brien explained.  "This suspension of service we believe is a result of BetonSports PLC attorneys ensuring the company no longer violates any laws during the course of the current investigation.  Worst case scenario is that all player deposits will be returned."

In fact, a US government civil complaint lodged against BetonSports PLC requires that all deposits be returned.  It is not known whether customers will receive any winnings on top of deposits however should the company be forced to close down or focus exclusively on the European/Asian markets and cease taking bets from US citizens entirely. 

BetonSports and the US government are bracing for a major showdown in a Missouri court this approaching Friday, according to a report in the London Guardian.

"The Missouri grand jury indictment outlined a range of offences - from those under the RICO (or racketeer influenced and corrupt organisations) Act, passed in the 1960s to end Mafia activity, to tax evasion - that prosecutors will pursue against "rogue" overseas operators.

"A small number of operators privately said they would be reviewing policy on whether to let directors travel to the US, depending on the developments with BetonSports. The justice department said it would be seeking extradition for all the defendants in the BetonSports case. But lawyers have said it might face difficulties in Costa Rica and the UK where taking online bets is not an offence.

"The small print of BetonSports' paperwork, sent to all investors who backed the company when it floated on the stock exchange two years ago, states: "At least some of the group's activities are illegal under US law."

Since the untimely passing of Kenneth Hense two years ago, Lawrence Walters has assumed the role as online gambling's preeminent industry attorney.

"This case is going to be watched very carefully," he told the Guardian.  "It is going to set a precedent for an entire multibillion-dollar industry."

Online Gambling Shares Plummet

Shares in other major online gambling companies including Sportingbet and PartyGaming continued to take a nose dive on Tuesday with the news of BetonSports CEO David Carruthers looking more grim by the hour.  Shares already began declining Monday as some news began developing, however, much of the news came later in the day London time and the actual indictment was unsealed during the late evening.

Stock in PartyGaming, which is based in Gibraltar, fell 17 percent on Tuesday on the London Stock Exchange; its decline even dragged the exchange’s FTSE index lower. SportingBet, which is also based in London, fell 36 percent Tuesday after falling 13 percent on Monday.

On Tuesday, some online gambling executives challenged the idea that their business would be affected. Others conceded they were consulting with lawyers and not planning any trips to the United States. None, though, wanted to speak on the record for fear of drawing the attention and ire of the authorities in the United States.

“This has nothing to do with us whatsoever,” insisted an executive from one of the largest online gambling sites listed in London when asked about the BetOnSports situation. Still, the company would not comment on the issue, he said.

The CEO of the industry's number three largest North American focused online gambling firm, Bodog.com, echoed the same sentiment appearing on CNBC Tuesday night.

"These charges have absolutely no bearing on Bodog.com and how it conducts its business." said Mr. Ayre in a statement released yesterday on the matter.

"Bodog.com has and always will run its entertainment enterprise with the highest ethical standards and within the laws in each of the jurisdictions where it conducts its business. Bodog.com will continue to carry on its business as usual. We are leading the way in digital entertainment and will continue to do so."

Related Articles:

Online Gambling News (blog)

----

Christopher Costigan, www.gambling911.com

Originally published July 19, 2006 12:20 am EDT