In April, former BetOnSports CEO David Carruthers pled guilty to racketeering charges stemming from his operation of the popular online sports book. He faced up to 33 months in prison and a maximum sentence was handed down on Friday.
U.S. District Court Judge Carol E. Jackson sentenced Carruthers on Friday after he was indicted by a grand jury four years ago, according to an article that appeared in Business Week authored by Bloomberg. In court late last week, Carruthers expressed remorse for his actions: “I understand now that the business was operating outside the laws of the United States. I realize I made the biggest mistake of my life. I am sorry for the actions of BetOnSports and the trouble it caused.” The company purportedly raked in over $1 billion in 2004 alone, with Bloomberg noting that a whopping 98% of wagers came from customers in the United States.
Carruthers had been under house arrest in St. Louis since 2006, but found time to get out and stretch his legs as part of the St. Louis Marathon. BetOnSports had been traded in London on the city’s stock exchange and Bloomberg added that Judge Jackson fined BetOnSports $28.2 million. However, the firm owes creditors in the United Kingdom and would likely not be able to make good on the $28.2 million penalty. Attorney Jeffrey Demerath told the financial news outlet, “We won’t be able to pay the $28 million. We have an obligation under the laws of the United Kingdom to pay the creditors first.”
A bevy of guilty pleas were entered in the BetOnSports case. In August, the company’s founder, Gary Kaplan, pled guilty to violating RICO in a Missouri courtroom. Kaplan received more than four years behind bars for his role in the company as well as a $43 million fine, according to the AFP news service. Assistant U.S. Attorney Steven Holtshouser commented in a press release distributed by the U.S. Department of Justice, “The prosecution and conviction of Carruthers is significant to the government’s efforts at enforcement of U.S. laws against offshore Internet and telephone sports wagering businesses, because Carruthers was both a foreign national and a top executive of BetOnSports.” Kaplan was arrested in 2007.
In June, Neil Scott Kaplan, Lori Kaplan-Multz, and Penelope Tucker all entered guilty pleas in front of Judge Jackson in the BetOnSports case. Each agreed to hand over money in Swiss bank accounts, but would not face any jail time. Scott Kaplan and Kaplan-Multz also received time in a halfway house. An article that appeared in the St. Louis Post-Dispatch explained why the trio received significantly lighter sentences than Kaplan and Carruthers: “Assistant U.S. Attorney Steve Holtshouser said the sentences reflect the minimal roles that Neil Kaplan and Kaplan-Multz played, their lack of decision-making power there, and their willingness to surrender their BetOnSports money.”
The USA-facing online poker site Bodog, founded by Calvin Ayre, continues to accept wagers on sporting events. The site is in the midst of the National Football League (NFL) playoffs, which kicked off over the weekend. Carruthers assumed the head role at BetOnSports in 2004 after joining the company in 2000. Both the Internal Revenue Service (IRS) and Federal Bureau of Investigation (FBI) participated in the investigation of the former CEO. Besides Holtshouser, Steven Muchnick and Special Assistant U.S. Attorney Charles Birmingham led the case on behalf of the United States Government.
On Capitol Hill, the Poker Players Alliance (PPA) is carrying the flag for explicitly legal online poker in the United States. Financial services industry compliance with the regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA) was delayed six months to June 1st. The delay came after a November decision by U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke. Congressman Barney Frank (D-MA) is championing the cause on the Hill with HR 2267, which establishes a full licensing and regulatory framework for internet gambling outfits to solicit U.S. customers. The measure is up to 63 co-sponsors on both sides of the aisle, but would not permit online sports betting.
Stay tuned to Poker News Daily for the latest from the BetOnSports case.