fBETonSPORTS, the online gambling company targeted by federal prosecutors in Missouri and Washington, is shuttering the majority of its billion-dollar operations and will no longer accept bets from the United States, a company spokesman said Thursday evening.
The move was seen as a significant victory for prosecutors targeting online gambling and as somewhat of a surprise. Industry experts and even a company insider had predicted that BetOn Sports would simply ignore the federal criminal prosecution and civil efforts to shut the company's U.S. operations down.
BETonSPORTS is one of the largest online gambling companies in the world, analysts say, in an industry worth an estimated $9 billion to $12 billion. After civil and criminal charges were announced last month, U.S. Attorney Catherine Hanaway said it was the largest prosecution of an online gambling company.
Hanaway could not be reached Thursday, not could spokesmen for the Justice Department in Washington.
More than $4.6 billion was bet with BETonSPORTS between 2001 and 2005 via hundreds of Web addresses and dozens of toll-free numbers, according to federal court filings and the company's most recent annual report. In 2005, customers placed 9.9 million bets, including 2.9 million over the phone averaging $201 apiece and 7 million online averaging $72 each.
Kevin Smith, a company spokesman, said 80 percent of the company's business came from U.S. customers, with the rest from Asian markets.
Smith said employees were told at 1:30 p.m. St. Louis time that the company's offices in Costa Rica and Antigua were being closed. The formal announcement was set for 7 a.m. London time today.
The decision will affect about 800 employees, at least 90 percent of whom worked in Costa Rica, he said.
Smith vowed that money frozen in gamblers' accounts since last month would be returned. The company has enough assets, he said, although it will take time.
"We don't want to have a run on the bank or our payment processor. But everyone will get paid in due time," he said.
Smith said he did not know specifics about how the company would prevent U.S. gamblers and bettors from logging on.
BETonSPORTS CEO David Carruthers was arrested in the Dallas-Fort Worth airport on July 16 on his way to a connecting flight to Costa Rica. He has since been fired by the company.
Three other companies and ten other individuals face charges, and federal prosecutors are seeking to make permanent a temporary restraining order that bars the company from accepting money from U.S. residents and seeks to force the company to give up $4.5 billion along with Hummer vehicles and other property.
In court filings, federal prosecutors have accused the company and current and former employees and executives of charges including mail fraud, wire fraud and racketeering for taking in billions of dollars in money from U.S. gamblers, even though the company knew it was illegal. The company fraudulently advertised that its operations were legal in the United States, prosecutors have charged.
An industry insider said the move might be a strategy to pay a fine and get the criminal and civil case resolved. "As a publicly listed company, they can't continue to operate with this hanging over their head," said the insider, who said he would be fired if he publicly identified himself.
The news could strike a further blow to an industry that saw significant drops in share price after Carruthers was arrested. Some industry analysts speculated that companies could avoid problems by avoiding travel to the United States.
maybe carruthers should've stayed out of the country.his fate might've been very different if he had done so.....