A group of men who ran a multi-million dollar Costa Rica-based sports betting website have been charged with illegal gambling and money laundering offenses, in the latest example of US authorities’ crackdown on internet gambling.
Authorities across the US have been pursuing a mounting number of cases against internet gambling companies, and businesses that offer services such as money transfers for them, over the last 18 months. Attempted prosecutions have been mounted on internet gambling companies and executives in Missouri, Louisiana, New York and Florida.
The 12 men indicted on Monday helped run internet sites that provided “offshore call centre and accounting services” to US sports bookies for a fee, but were not involved with taking in bets or paying out winnings. Eight of the men were arrested on Monday.
The US attorney in the Southern District of New York, which charged the group, said that the websites had gathered millions of dollars a year from hundreds of bookies since at least 2005.
Signs of a crackdown on online gambling in the US emerged last July with the arrest and indictment of David Carruthers, former chief executive of London-listed online gambling company Betonsports, which was also based in Costa Rica. Mr Carruthers, who is British, is awaiting trial in Missouri.
Betonsports and other internet gambling companies had hoped that they could circumvent the US laws regarding sports betting by conducting business from offshore. However, US some authorities have taken a different view.
The prosecution of foreign online gambling companies has sparked some international criticism, and the US has been accused of breaking World Trade Organisation rules by singling out foreign businesses.
Since Mr Carruthers arrest, President George Bush has signed into law the Unlawful Internet Gambling Enforcement Act, which stopped credit card companies from processing payments to gambling websites. The law spurred most major internet gambling companies to pull out of the US market, which was by far the largest in the world.
The internet gambling operation indicted on Monday was run by Carmen “Buddy” Cicalese, who remains at large, the US attorney said. His accomplices included men with a list of colourful pseudonyms, such as Louis “Lou the Shoe” Santos, Marc “Box” Group, and Carl “Sheepshead” Muraco. The case has been handled by the organised crime unit of the US attorney’s office.
The indictment claims the men were collecting fees from sports book-keepers within the US. The bookies would register their clients with the sites for a fee of USD 15-USD 30, and gamblers could then placed bets by phone or over the internet, via sites such as betwestsports.com, the indictment said. Sports betting, with a few exceptions such as horse racing, is illegal in the US outside of Nevada.
“If everything is done offshore, there is still a grey area,” said Joe Kelly, a law professor at Buffalo University. “If you are dumb enough to do anything in the United States, you are asking for trouble.”