BetOnSports Founder Pleads Guilty To Racketeering

Hugh Pickens writes "The founder of Internet- and telephone-based gambling operation BetOnSports has entered guilty pleas to three US charges, including a racketeering charge, and will forfeit $43.7 million to the US government as part of a plea agreement. Beginning in the mid- to late-1990s, Gary Kaplan set up businesses in Antigua and later Costa Rica to provide sports betting services to US residents through web sites and toll-free telephone numbers. Those numbers terminated in Houston or Miami, and were then forwarded to Costa Rica by satellite transmitter or fiber-optic cable. Some of Kaplan's web servers were located in Miami and were remotely controlled from Costa Rica. People became customers by depositing money in a BetOnSports account. By 2004, the BetOnSports organization's principal base of operations in Costa Rica employed about 1,700 people, had nearly one million registered customers and accepted more than 10 million sports bets. Now bankrupt, BetOnSports took in $1.25 billion in 2004, with 98 percent of that revenue coming from bets made through its web site by clients in the United States. 'Gary Kaplan made millions of dollars by making it too easy for people to gamble away their hard-earned money without having to leave their homes,' said FBI agent John Gillies. 'Today's guilty plea should have a lasting effect because Kaplan was not only the founder of BetOnSports, he was also one of the pioneers of illegal online gambling.'"

Re:Victimless crimes?

[SerpentMage]

Please explain to me how this is applied to Las Vegas, Atlantic City and all of those other "legal" gambling institutions throughout America?

Last I remember you show up with money in a gambling locale and they will let you loose it quite quickly...

This is about the fact that the American government does not control the monies... Nothing more nothing less... I wish everybody could be honest about that!

Re:His mistake

[whoop]

Hillary (She IS the Secretary of State!) has said this week we are just as corrupt as Nigeria. Therefore, your politicians are fair game to take money.

Re:Who was he hurting?

[Miros]

Well, in some sense internet gambling still is not really illegal, as in some respects the federal government would have some difficulty in passing a law like that without the cooperation of each individual state. Instead, the act, written by Kyl of Arizona, makes it illegal to transfer money to or receive money for the purposes of games of chance electronically over the internet, or some such mechanism like that. The actual function is to make the money transfers illegal, making it the banks problem rather than the problem of the firms that are typically located overseas anyway.

But yeah, that's what's interesting about it. The states that stand to lose the most are the minority (NJ, NV, CT, PA, couple of others that have legalized certain types of gaming). It seems likely that other states will continue to challenge this paradigm for the possibility of grabbing a bunch of tax cash very quickly until the law is repealed.

Re:Despite the fact that

[WindowlessView]

it wants to protect its brick and mortar casinos...

And the state lotteries. They are up to their eyeballs in the online crackdown.

Re:The real reason

[torkus]

Actually, barter is subject to taxation legally.

Generally no one pays the taxes and it's not easy to track so the IRS ignores it (for now).

Trying to replace money with bartering? Welcome to...yep...tax evasion!

Re:His mistake

[otter42]

I'm calling B.S. According to The Register article [theregister.co.uk] from the time, he was arrested at a hotel in Santo Domingo.

You're getting this somewhat mixed up with David Carruthers, who *was* arrested at Dallas Airport, but while changing planes. Moreover, wikipedia reports that it happened while he was flying from the UK to Costa Rica. If this had been a CIA/FBI plot, like you insinuate, they would have picked a better spot than Houston, and there wouldn't have been a lay-over.

I'll agree that the US is overstretching it's bounds here, but injecting misinformation and hyperbole into the conversation doesn't help anyone.