US getting tough about online gambling?

[byronkincaid]

http://www.telegraph.co.uk/money/graphics/2006/07/18/ubeton17pdf.pdf

[mikkyT]

They have him by the balls, he operated in the, first NYC then Florida, and moved to the west indies and finally incorporated on as a PLC trading the Stock Exchange London.

He cannot deny operating in the USA, and advertising for illegal gambling within the US is obviously illegal (poker sites can do it because of the play money tables).

I'd like to see them try this on a non US national (or is he?) who has never ran a business within the US.

[mikkyT]

Tax evasion... so they are saying effectively that because bets are being placed by US nationals, that these bets are due excise on them?

[Mbuna]

found this earlier

Federal officials have charged 11 people, including the CEO of a big gambling Web site, alleging they committed conspiracy, racketeering and fraud in taking sports bets from U.S. residents.

The Justice Department said Monday it is seeking the forfeiture of $4.5 billion, cars and computers from the defendants, including BetOnSports PLC and three other companies.

BetOnSports Chief Executive David Carruthers and four other defendants were arrested over the weekend. Carruthers was arrested Sunday at Dallas-Fort Worth International Airport during as he awaited a flight from Texas to Costa Rica, where the company has operations.

The 22-count indictment was unsealed Monday in St. Louis, where a federal judge also ordered BetOnSports to stop accepting bets placed from within the United States.

Several of the defendants live outside the United States, which will make them hard to catch, said U.S. Attorney Catherine Hanaway in St. Louis.

"This is a tough crime to prosecute," she said.

Among those who live abroad is Gary Stephen Kaplan, the founder of BetOnSports, which is incorporated in the United Kingdom and listed on the London Stock Exchange.

Trading of the company's shares was suspended in London on Tuesday. Shares of BetOnSports fell as much as 24 percent Monday following news of Carruthers' arrest, but they recovered to close 17 percent lower at 122.50 pence ($2.24).

In the fiscal year ending Feb. 5, BetOnSports reported a 65 percent gain in operating profit on continuing operations to $20.1 million. The company said it handled $1.77 billion worth of bets for the year, up 25 percent.

Kaplan is a former New York area bookie who moved his operations to the Caribbean after being arrested on gambling charges in New York in 1993.

Despite the move, the United States has remained Kaplan's main market, officials said. He is now living in Costa Rica and owns 15 percent of the company, according to the indictment. A warrant was issued for his arrest.

Officials said those arrested include Kaplan's brother, Neil Scott Kaplan, who handled purchasing for the company. He was arrested in Fort Pierce, Fla. Two other defendants were arrested in Miami and another was arrested in Philadelphia.

Carruthers was being held in Fort Worth after he was detained while trying to make a connecting flight Sunday from the United Kingdom to Costa Rica. A federal magistrate ordered him held until a detention hearing on Friday.

Carruthers' first appearance in court Monday lasted about 10 minutes. He was led into the courtroom in handcuffs, wearing a lime green T-shirt with the words "World Traveler" across the front, faded jeans and gray suede shoes.

Tim Evans, an attorney who appeared on Carruthers' behalf, handed him a lengthy document, adding, "You won't have time to read it all, of course."

Kevin Smith, a spokesman for BetOnSports, said Carruthers and other company officials had no idea that there was an indictment.

"Certainly had they told us, we would have been more than willing to negotiate with them and work on whatever these charges are," Smith said. "There wouldn't have been any need to nab him while he's waiting on a layover for a flight."

Others named in the indictment include Kaplan's sister and several BetOnSports employees. The other three companies named in the indictment are based in Florida and handle promotional activity for BetOnSports.

The indictment charges Kaplan with failing to pay federal wagering excise taxes on more than $3.3 billion in U.S. wagers.

Authorities also charged that Kaplan's group fraudulently claimed that Internet and phone wagering on sporting events was legal and licensed.

Internet gambling has become a political issue in Washington.

Last week, the House passed a bill that would make it illegal for American banks and credit card issuers to make payments to online gambling sites. The bill's fate in the Senate is uncertain, in part because of exemptions granted for horse racing and state lotteries.



Associated Press writer Jeff Douglas in St. Louis contributed to this report.

[Bongo]

I read a report on the register about this and one thing worried me:

"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."

I take this to mean no cash outs etc.

Now I have never used the site but it worries me that a similar thing could happen to other sites?

What is the site actually accused of? I see that the founder ran sports books in the US before starting it but surely that shouldn't carry over to the company and it's CEO?

[AndrewT]

I read a report on the register about this and one thing worried me:

"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."

I take this to mean no cash outs etc.

Now I have never used the site but it worries me that a similar thing could happen to other sites?

What is the site actually accused of? I see that the founder ran sports books in the US before starting it but surely that shouldn't carry over to the company and it's CEO?

BetOnSports actively target US customers with mailouts (a direct marketing company was named in the lawsuit) encouraging them to bet on sporting events - an illegal activity. Poker rooms don't encourage people to play for real money in their marketing (hence the .net sites) so they're not affected by this.

This action has nothing to do with online poker - nothing at all.

[Robert HM]

I read a report on the register about this and one thing worried me:

"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."

I take this to mean no cash outs etc.

Now I have never used the site but it worries me that a similar thing could happen to other sites?

What is the site actually accused of? I see that the founder ran sports books in the US before starting it but surely that shouldn't carry over to the company and it's CEO?

BetOnSports actively target US customers with mailouts (a direct marketing company was named in the lawsuit) encouraging them to bet on sporting events - an illegal activity. Poker rooms don't encourage people to play for real money in their marketing (hence the .net sites) so they're not affected by this.

This action has nothing to do with online poker - nothing at all.

As I understand it not only were BetOnSports encouraging the betting but were expressly declaring themselves as licenced and legal in the States, that is the fraud allegation.

Poker rooms not encouraging play for real money?? Not sure I agree with you there. How aften are you told about wonderfull riches that can be yours, WSOP seats that can be won on that comp or another, ok some are freerolls but most are not. How often do you see ads, spam on forums, emails etc etc pushing rake back deals and deposit bonuses. None of this is related to play money tables.

[tikay]

I read a report on the register about this and one thing worried me:

"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."

I take this to mean no cash outs etc.

Now I have never used the site but it worries me that a similar thing could happen to other sites?

What is the site actually accused of? I see that the founder ran sports books in the US before starting it but surely that shouldn't carry over to the company and it's CEO?

BetOnSports actively target US customers with mailouts (a direct marketing company was named in the lawsuit) encouraging them to bet on sporting events - an illegal activity. Poker rooms don't encourage people to play for real money in their marketing (hence the .net sites) so they're not affected by this.

This action has nothing to do with online poker - nothing at all.

Andrew T gets it right. These allegations are specific to the individuals concerned & have no bearing on the Sector as a whole. The plunge in Share Prices of these companies is a trypical knee-jerk reaction by the Market, & there are some bargains to be had today. 888, Sporting Bet (hit particularly hard), & even, can you believe this, Neteller shares are being savagely marked down. Time to make money on the Market, though personally, I'd avoid Party Gaming.

WARNING - Stock prices can go up, as well as down.......

[mikkyT]

Forums and internet is not the same as mailshots though Robert. It would be hard to prove that an internet marketing campaign was contravening mail fraud laws...

BetOnSports chose to mail flyers to US addresses claiming thats practises were legal and licenced in the US.

Poker sites when advertising in the US (from the few adverts I've seen) advertise play money poker and freerolls. Those with other operations, such as sports books, tend not to advertise these at all in the US.

[AndrewT]

As I understand it not only were BetOnSports encouraging the betting but were expressly declaring themselves as licenced and legal in the States, that is the fraud allegation.

Poker rooms not encouraging play for real money?? Not sure I agree with you there. How aften are you told about wonderfull riches that can be yours, WSOP seats that can be won on that comp or another, ok some are freerolls but most are not. How often do you see ads, spam on forums, emails etc etc pushing rake back deals and deposit bonuses. None of this is related to play money tables.

Not within the US - it's all 'Have fun at partypoker.net' etc, playing up the enjoyment factor, rather than the hard profits. Of course, in the online world, anything goes - but that's all offshore.

[Robert HM]

point taken, but that wasn't clear in your posts.

But I would not  run to use the off shore status to defend yourself. I am still annoyed to see the yanks being delivered of 3 bankers who may, or may have not, have done naughties in this country without stepping in to "the Land of the Free, though the effect of the alleged fraud was felt in the States. A similar situation would be where a US resident plays a game on an offshore site.

[mikkyT]

But that could apply to absoultely anything thought Robert, surely? If a US national uses a brothel in Amsterdam, is the US going to extradite said brothel madam because its illegal in the US? Troubled times are ahead if thats the case... George Dubyas mob need shooting.

[Robert HM]

But that could apply to absoultely anything thought Robert, surely? If a US national uses a brothel in Amsterdam, is the US going to extradite said brothel madam because its illegal in the US? Troubled times are ahead if that's the case... George Dubyas mob need shooting.

I think it has to have an effect on US soil, so it may not go that far, but you have an idea of the effect of our "special" relationship with the Fed Govt.

Did you know the Americans refused to sign up wholeheartedly to the International Criminal Court because they didn't want their Nationals tried abroad. Lets see if spell check recognises the word hypocrisy

[doubleup]

I think it has to have an effect on US soil, so it may not go that far, but you have an idea of the effect of our "special" relationship with the Fed Govt.

Getting back to the case in question - the fact that dollars are used in the transaction is enough of an effect.

There is another less publicised extradition case where a UK citizen is being extradited for price-fixing although that was not illegal in the UK at the time but was in the US.  Apparently the judge agreed with the extradition request on the grounds of the effect of the price fixing - that it defrauded some parties - which was a crime in the UK. 

[mikkyT]

Land of the free.....


 

Abe Licoln would be turning in his grave if only he knew...