BetonSports Unwinds US Business

by Leroy Baker, for LawAndTax-News.com, New York

14 August 2006

Embattled online gaming firm BetonSports is unwinding its US-facing business in an apparent bid to placate the US judicial authorities who have accused the firm of operating illegally in the country.

According to reports, the company is scaling down its operations in Costa Rica and Antigua, where the physical business is located, with the loss of some 800 jobs out of a total global workforce of almost 2,000.

The UK newspaper, The Times, reported that news of the planned closure began to leak out on Thursday after a large number of company-owned cars were put up for sale. The paper also reported that the firm is currently in negotiations with its bankers to release funds in order to pay off creditors and customers with outstanding bets.

It is said that the company will instead concentrate on developing its markets in Asia, Central and South America. However, the loss of its American market, where the company derives up to 80% of its global revenues, will be a bitter pill for the firm, and its investors, to swallow.

The US government has said that by taking bets from US punters, BetonSports has contravened the 1961 Wire Act, which prevents the taking of sports bets across state and international boundaries over telephone wires. As a consequence, the company and several of its executives have been accused of a number of crimes including fraud, racketeering and tax evasion. The US government seeks forfeiture of $4.5 billion and the removal of access to the company's websites in the United States.

Nonetheless, legislation in this area remains somewhat ambiguous since the Wire Act was drafted before the coming of the internet. The House of Representatives recently passed legislation to update the laws against operating internet casinos, particularly those operating offshore, but the Senate has not yet passed the legislation.

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