BetOnSports pulls plug

[cisco]

The Times August 12, 2006


BetOnSports pulls plug on US-facing operations
By Dominic Walsh



THE future of BetOnSports, the internet gambling firm at the centre of American fraud and racketeering allegations, hung in the balance last night after it closed its US-facing operations.
The company, which had temporarily stopped taking bets from US punters after the Department of Justice obtained a restraining order, said that it would be ceasing its operations in Costa Rica and Antigua, with the loss of 800 jobs. It said that it would “pay any liabilities to staff and creditors . . . and repay balances due to US customers in an orderly manner”. However, it gave warning that such repayments would “depend upon the company’s ability to realise further and sufficient funds . . . and to earn sufficient profits from operations which are not US-facing”.



The wording of the statement casts doubt on BetOnSports’ ability to repay all the money held in the accounts of American punters. One of the problems it faces is that some of the money is tied up with payment processors, such as Neteller and FireOne Group. Processors are commonly used by American gamblers to circumvent attempts by the US Government to stop internet gambling by banning credit card companies from accepting payments. Both Neteller and FireOne have suspended dealings with BetOnSports.

The crisis at BetOnSports was precipitated last month when David Carruthers, its chief executive, was arrested at Dallas-Fort Worth airport while changing flights on his way from London to the group’s headquarters in Costa Rica. Mr Carruthers, the company itself and ten other individuals, including Gary Kaplan, the founder of BetOnSports, were indicted on charges ranging from racketeering to wire fraud, illegal gambling and tax evasion. Mr Carruthers, who was dismissed last week, is waiting to be freed on bail of $1 million (£529,000).

By closing its US-facing websites, BetOnSports is writing off about 85 per cent of its annual turnover and an even greater proportion of its profits. The majority of its remaining businesses — Easybets, Hooball and 777ball — are aimed at Asian gamblers.

Analysts were sceptical of its ability to survive and said it was unlikely that its shares, which have been suspended since the events of last month, would be able to resume trading. Wayne Brown, of Altium Securities, described BetOnSports’ decision to close its US business as a worst-case scenario.

[The Judge]

BOS says closing US business