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BetOnSports pleads guilty to charges of racketeering in US

"This plea, combined with the terms of the civil junction, should put an end to the BetOnSports illegal gambling empire."

Catherine Hanaway, US Attorney

BetOnSports PLC, an online gambling firm, has pleaded guilty to federal racketeering charges, US Attorney Catherine Hanaway announced on Thursday.

Hanaway's office has been pursing a 22-count criminal indictment against the London-based firm and its top executives since last July. Her office settled civil charges against BetOnSports last November that permanently bars the company from accepting any 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.

Under US federal law, companies like BetOnSports can plead guilty and be penalized like people can, said Jeffrey Demerath, a lawyer representing BetOnSports in St. Louis, Missouri.

Now that the legal case is settled and access to the US market is banned, BetOnSports is going out of business, Demerath said.

BetOnSports refused to send attorneys to criminal hearings in St. Louis federal court, claiming that Hanaway had no authority to charge the foreign firm. The firm took a majority of its bets from US customers, but processed the wagers in offshore offices in Costa Rica and elsewhere.

"This plea, combined with the terms of the civil junction, should put an end to the BetOnSports illegal gambling empire," Hanaway said in a statement.

The case has been closely watched by the online gambling industry, which generates about US$6 billion annually in the US.

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 other lower-level defendants in the company.

Sentencing for BetOnSports is set for Oct. 19. The company faces a fine up to US$500,000 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, last year.

Kaplan had a detention hearing scheduled for yesterday morning before US 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 are filed using a 1960s-era law known as the Wire Act that prohibits placing bets on sports events over the telephone.
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