Gaming ads strongest part of U.S. indictment
Gaming ads strongest part of U.S. indictment
got this from another forum...thought that some might find it interesting.
By the A.M. Costa Rica staff
The strongest allegations about executives of BetonSports in their criminal troubles appear to be that they advertised their Costa Rica-based gambling operation inside the United States.
The U.S. indictment made public Monday against seven BetonSports figures and four Florida associates alleges racketeering, conspiracy, fraud, tax evasion and money laundering.
Company executives also traveled to the United States to contract for advertising, which was placed on gambling Web sites, in magazines, on radio and on cable television and delivered via direct mail.
A company representative also made purchases inside the United States and had the items shipped to Costa Rica, including two Humvees, according to the indictment.
Other than the advertising, which seems to have been handled by other firms within the United States, the seven BetonSports figures seem to have a strong defense that they were physically located in Costa Rica or elsewhere, as were their companies.
For example, the United States says that BetonSports and affiliated companies committed fraud because they said they were "legal and licensed" but they were not legal and licensed inside the United States. However, BetonSports says on its corporate Web site that it is licensed by the Antigua and Barbuda Division of Gaming.
The money laundering charge, a very emotional allegation, is simply defined that company executives laundered money received as illegal wagers. But if the wagers were legal, the money laundering charge collapses.
The U.S. government also says that the offshore gambling companies failed to pay a U.S. wagering tax. But BetonSports does not have offices in the United States and it is listed on the London Stock Exchange. Even the indictment notes that it is incorporated in the Britain.
As part of the fraud allegation, the U.S. indictment said that BetonSports and its associated companies created the Offshore Gaming Association and the International Sportsbook Council and presented them as independent watchdog agencies, when in fact their purpose was to minimize loss via gambler complaints.
The indictment estimates that between Jan. 29, 2001, and Feb. 1, 2004, the gambling Web sites took in nearly $3.5 billion. It lists among other firms BetonSports in Antigua, Millennium, Jaguar, Infinity and Gibraltar, as well as BetonSports in Costa Rica.
The U.S. government said that 98 percent of the companies' bets were from the United States, but the company says on its Web site that it is seeking to beef up its presence in the Asian markets, which it says have great potential.
Finally the government alleges that BetonSports obstructed the U.S. tax laws by having gamblers there send money to third parties in other countries, like Ecuador, Antigua and elsewhere. If the company is not obligated to pay U.S. tax, this is a hollow allegation.
The case is being handled in the Eastern District of Missouri by the U.S. Attorney's office there. That state also is home to former U.S. attorney general John Ashcroft, who worked against online gambling and is a fundamentalist Christian.
There is no indication how Costa Rica will react to the indictment. Gary Stephen Kaplan, the main figure in the indictment and the founder of BetonSports lives here. If he is arrested, U.S. officials must show that he broke laws in the United states that are similar to crimes here. Gambling is not a crime here, but fraud, money laundering and conspiracy are, which may be why U.S. officials tacked them on the indictment.
If the U.S. charges prevail, the entire sportsbook industry here will be in jeopardy because nearly all do what the United States says BetonSports did criminally.
The indictment of the 11 individuals comes at a time when the U.S. Congress itself is uncertain if Internet gambling is covered by a 1961 wire act designed for U.S. bookies who made telephone calls.
The U.S. House passed a bill a week ago that made clear that Internet gambling was criminal, but the U.S. Senate still must approve the measure.
Perhaps the biggest sin of BetonSports was to be very visible. Chief executive David Carruthers has been campaigning for the United States to adopt a regulatory approach instead of prohibition. He even went so far as to write an op-ed piece last March for the Los Angeles Times.
For Costa Rica, this is a major development because thousands of young, bilingual Ticos work in the sportsbooks. BetonSports says it has 2,000 person on staff during high betting seasons.
BetonSports may have made serious errors when it marketed its gambling Web sites so aggressively. Sending gambling promotions via the U.S. mails, which the government alleged did happen, is a crime. And A.M. Costa Rica does not accept sportsbook and gambling ads because company owners believe to publish them would be contrary to state and federal laws in the United States.
But the United States, too, has strong protection for speech, even commercial speech like advertising. So the the odds are even money that this case will be in the appeals courts for years if there is a conviction.
