Online Gambling

How a Business Becomes a Racket


Yesterday a federal judge in St. Louis sentenced BetOnSports, which just a few years ago billed itself as "the largest online wagering company in the world," to probation and a $28 million fine that, per A.P., "lawyers on both sides say probably will never be paid." The company's crime was openly running a business that was considered perfectly legal in the U.K., where it was incorporated, and in Costa Rica, where its servers were located. Because many of its customers were Americans, the U.S. Justice Department argued that BetOnSports violated the federal ban on using "a wire communication facility" to accept bets "on any sporting event or contest." That position hinged on the view that the company was taking bets in bedrooms and dens across the United States, as opposed to its operation center in Costa Rica. In the end, it was the physical location of the company's officers that proved decisive. Last month BetOnSports founder Gary Kaplan, an American nabbed in the Dominican Republic in 2007, was sentenced to more than four years in prison and a $44 million forfeiture after pleading guilty to conspiracy. Former BetOnSports CEO David Carruthers, a Scotsman arrested during a layover at the Dallas/Fort Worth airport in 2006, faced charges that could have resulted in a prison sentence of 20 years. He pleaded guilty to racketeering in April but has not been sentenced yet.

I discussed Carruthers' arrest in my 2008 Reason story about the crackdown on Internet gambling. In my column today, I expressed the hope that Congress would reconsider this unjust and senseless crusade.

NEXT: Personal Savings Still Falling, Still Being Praised for Rising

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  1. It's not senseless at all. Those casino operators paid good money for membership in the state-sanctioned gambling cartel, and they have every right to expect no interference from Internet interlopers.

    If Congress doesn't stick up for their campaign contributors this time, their credibility in the future will be totally shot.

    1. Obviously gambling in the comfort of your own home is a grave threat to, uh...

      Another classic bootleggers and Baptists, with the kicker of applying to anyone who happens to sucker one lousy American.

    2. Sometimes the first post pretty much says all there is to say. Hats off to Tulpa.

  2. Selfish pricks...this is an outrage.

    Of course, most everything the government does these days is pretty outrageous.

  3. This isn't directly related, but concerning the very idea of gambling being illegal, I love this:

  4. This makes me want to repeatedly kick kittens. And by kittens, I mean Congressmen's testicles.

    For most people here, Balko is the guy whose writing riles them up. For me, it's Sullum.

  5. BP, Jacob covers some beats (this, the drug war) that are infuriating.

    But what really drives me nuts about this story is that it's just indicative of how obnoxious and domineering our government is; not just to us, but more and more to the whole world.

    It isn't our President who is our face to the world (people hate Americans because you elected Bush, etc.), but rather our government, and it is a bully.

  6. Epi, it's been that way for a while. It was American pressure that pushed the Dutch to tighten their opium laws in the 1910's.

    And yes, bully is a good word for our government. No wonder Teddy Roosevelt used it so much.

  7. Silly Libertarians.
    Business is a racket.

  8. Teddy should have formed the Bully Moose party.

    1. Not necessary. "Bully" is what a Bull Moose does.

  9. Follow the money -- US Casino owners need Congress to do their bidding by keeping offshore internet gambling illegal. Just as organized crime launders money to contribute to politicians to maintain a monopoly on drugs. With our political system so corrupt, don't expect any rational outcomes. America is the greatest country on earth, don't ya know? LOL

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  11. Five Flavor Pound Cake

    Original Recipe Yield 1 - 10 inch tube cake


    * 1 cup butter, softened
    * 1/2 cup shortening
    * 3 cups white sugar
    * 5 eggs, beaten
    * 3 cups all-purpose flour
    * 1/2 teaspoon baking powder
    * 1 cup milk
    * 1 teaspoon coconut extract
    * 1 teaspoon lemon extract
    * 1 teaspoon rum flavored extract
    * 1 teaspoon butter flavored extract
    * 1 teaspoon vanilla extract
    * 1/2 cup white sugar
    * 1/4 cup water
    * 1/2 teaspoon coconut extract
    * 1/2 teaspoon rum flavored extract
    * 1/2 teaspoon butter flavored extract
    * 1/2 teaspoon lemon extract
    * 1/2 teaspoon vanilla extract


    1. Preheat oven to 325 degrees F (165 degrees C). Grease a 10 inch tube pan. In a small bowl, combine flour and baking powder. Set aside. In a measuring cup, combine the milk and 1 teaspoon each coconut, lemon, rum, butter and vanilla extracts; set aside.
    2. In a large mixing bowl, cream butter, shortening and 3 cups sugar until light and fluffy. Add eggs, and beat until smooth. Beat in flour mixture alternately with milk mixture, beginning and ending with flour mixture. Spoon mixture into prepared pan.
    3. Bake for 1 1/2 to 1 3/4 hours, or until cake tests done. Cool in pan on wire rack for 10 minutes.
    4. Turn cake out of pan onto wire rack. Place waxed paper under rack to catch glaze drippings. Slowly spoon Five Flavor Glaze onto top of hot cake. Cool completely.
    5. To make the Five Flavor Glaze: In a saucepan, combine 1/2 cup sugar, water and 1/2 teaspoon each coconut, lemon, rum, butter and vanilla extracts. Bring to a boil, stirring until sugar is dissolved.

  12. Let's set aside for the moment that this is about selling gambling services - which we all agree shouldn't be illegal in the first place - and pretend it is about selling slavery services, which we all agree should be illegal. If some company from Mauritania or Niger, where slavery retains quasi-legal status, set up some kind of offshore slavery service and sold it over the internet to Americans, are you guys saying you'd object to the directors of that company being arrested should they turn up in the US? As long as internet gambling is illegal in the US, why shouldn't foreign purveyors be punished for selling it to Americans in America? It is very simple to geographically block internet access to your servers. Broadcasters do this all the time.

    1. Just found out the wife has shorted her checking account by two grand trying to make up her losses at a river boat, so my thoughts on legal gambling are a little clouded this morning. Fuggin Asians! On the bright side, I might have to administer some anal discipline very soon....

  13. Sean, why is it the responsibility of the seller from overseas to guarantee an American cannot gamble on their site? If the law is an American one, isn't it only the American buyer who is breaking the law when the site is not operated in America? I say this because the foreign company should not have to rig their site just because we're governed by prudes. Their foreign site should not be burdened by the regulations of a given country just because some people there might come across it.

  14. Let's say hypothetically that a Drug Lord sold illegal drugs to Americans in America via his website in Columbia (forget about how the drugs are delivered for this hypothetical). The US government learns of this Drug Lord after investigating drug use; the Drug Lord then visits his college-age children illegally in the US on scholarship, and DEA spots him; he is arrested for selling drugs in the US to Americans. And sent to prison. It all comes down to "nexus" in the US vis-a-vis the business activity. Basically, in our fascist state, if you break US law, don't visit the US.

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