Victimless Fraud

In addition to indicting BetOnSports CEO David Carruthers and founder Gary Stephen Kaplan, the Justice Department is charging four advertising executives who helped publicize the site in the U.S. The federal indictment charges them with participating in a "racketeering conspiracy" by assisting "a scheme to defraud gamblers in the United States by inviting, inducing and persuading them to place bets." The "fraud," which is subject to a penalty of up to 20 years in prison, did not involve ripping anyone off. Rather, the defendants are accused of creating and placing ads that "falsely stated that internet gambling on sporting events and contests was 'legal and licensed.' " This happens to be true in Costa Rica, where the Web site is based. The Justice Department argues that the Wire Act, which prohibits using interstate phone lines to take bets on sporting events, applies to bookmakers in other countries, but it arguably does not. Despite the talk of fraud, this legal dispute has nothing to do with consumer protection, except in the sense of protecting consumers from their own desire to bet on sports.

Last week I commented on the House vote to ban online gambling (which the Justice Department claims is already illegal), and a couple years ago I discussed the federal government's threats against businesses (such as advertisers) that "abet" such betting.

[Thanks to Michael Keferl for the tip.]