BetonSports indictments: Just the facts

As crazy as this may seem, the indictments lodged against BetonSports PLC CEO David Curruthers and other principals involved with the mammoth online gambling enterprise may rank among the largest "criminal" cases of its kind (emphasis being that all named parties are innocent until proven guilty in a court of law).  That's because BetonSports.com has taken in over $80 million this year alone according to financial disclosures and the year is only halfway over.

While the online gambling industry sat in "panic mode" much of Monday, it is easy to lose sight of some clear facts surrounding these latest indictments.

Some of those named in the indictment have not been with the company for over two years That includes the brother of BetonSports.com founder, Gary Kaplan.  Neil Scott Kaplan is reported to have left the company at least two years prior to Monday's unsealed indictment. 

The investigation is likely to have begun over two years ago.  The unsealing of these indictments could very well have been strategically timed in conjunction with last weeks passage in the House to ban online gambling. 

Likewise, David Carruthers began his position at BetonSports.com around this same time in the summer of 2001. He was responsible for helping to take this company public.

All of those named have in one shape or another had dealings with DME Promotions DME Promotions stands out in the indictment like a sore thumb, though it would at first glance appear that there were four different media firms named in the complaint.  Other than BetonSports PLC, the other four companies are actually one in the same, interconnected.  All of those named in the complaint from BetonSports PLC are/were either executives and/or marketing personnel.  Other key people who have served in BetonSports management capacities over the years outside of the marketing spectrum and/or senior level were excluded from Monday's unsealed indictment. 

In conjunction with the indictment, the United States has filed a civil complaint in federal court to obtain an order requiring BetonSports PLC to stop taking sports bets from the United States, and to return money held in wagering accounts to account holders in the United States. U.S. District Judge Catherine D. Perry issued the temporary restraining order today. A hearing in the civil case has been requested within 10 days. As authorized by federal statute, the

While scary to read, it should be made clear this separate complaint has not yet been heard and is in fact a civil issue, as opposed to the more serious charges lodged against various individuals today. 

One of the most serious implications regarding this matter deals with the indictment handed down to one David Carruthers, who is not a US citizen and this marks the first Federal indictment by the US government against a British citizen in regard to online gambling.

In Britain, as in Costa Rica, it is legal to accept and place bets over the internet (though Costa Rican are discouraged from placing bets with those companies residing in that Central American nation). 

The issue here is that BetonSports.com, both a British and Costa Rican online gambling enterprise, has been accepting bets from US citizens.  The majority of internet gambling firms based out of Europe do not accept wagers from American citizens. 

The law, however, is vague and does not apply to the internet, which has led experts to suggest BetonSports.com's rather large phone business (which has accounted for more than its online service over the years) could factor into "Wire Act" violations that became law in the early 60's. 

BetonSports.com, while considered to be working within the framework of US laws prohibiting money exchanges in the United States for gambling purposes except where licensed, is widely reported to have embraced itself to "credit" business in years past.

That relationship, however, remains somewhat vague and to what degree BetonSports PLC may have been involved is especially vague considering the company's acceptance onto the London Stock Exchange. 

In speaking with management of Sportingbet PLC we were informed that their company would never acquire any type of business enterprise that dealt in "credit".

Since 1997, the last time the offshore gambling industry witnessed a major series of indictments against multiple enterprises and individuals, most industry-related cases have pertained to "money laundering", "tax evasion" and in some cases, "organized crime".  The "Wire Act" is rarely used alone but rather in conjunction with other violations - unlike in 1997 when it was the only focus in the majority of cases resulting in 21 indictments. 

With a hearing in the civil case looming on the horizon and as we wait for an official announcement from BetonSports PLC, this story should only gain more interest in the days and weeks to come.

Related Articles:

Morgan Stanley waits and wonders about fate of BetonSports PLC"
Subpoenas flying to get information on BetonSports founder: CEO detained
BetonSports.com CEO David Carruthers indictment for racketeering
Online gambling industry news (blog)

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Christopher Costigan, www.gambling911.com

Originally published July 17, 2006 10:51 pm EDT