Gary Kaplan, the founder of BetOnSports, has pled guilty to violations of RICO and the Wire Act in a Missouri courtroom. He will face between 41 and 51 months behind bars and pay the United States Government $43.65 million.
According to a press release distributed by the U.S. Department of Justice, Kaplan established businesses in Costa Rica, Antigua, and Aruba. One company was BetOnSports, which advertised heavily to U.S. customers and offered the following technological prowess: “Kaplan’s toll-free telephone lines terminated in Houston or Miami and then were 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.”
The Department of Justice contends that in 2004, BetOnSports had 1,700 employees in Costa Rica alone and nearly one million registered customers. Its clientele issued more than 10 million bets that combined for over $1 billion. Also in 2004, BetOnSports held an initial public offering (IPO) on the London Stock Exchange that earned Kaplan $100 million. He was arrested in March of 2007 and sentencing will take place on October 27th. He has been held without bond ever since being detained by U.S. authorities.
Former BetOnSports CEO David Carruthers pled guilty to racketeering charges in April and now faces up to 33 months behind bars. Carruthers, who was detained in St. Louis, will learn his fate during a sentencing hearing on October 2nd. In June, Neil Scott Kaplan, Lori Kaplan-Multz, and Penelope Tucker all pled guilty for their roles with BetOnSports. None will receive jail time, although Tucker was issued a one year probation. Kaplan’s trial had been scheduled for September 21st before last week’s plea agreement was announced.
Interactive Media Entertainment and Gaming Association (iMEGA) Chairman Joe Brennan, who has been closely monitoring the actions in the BetOnSports case, told Poker News Daily, “It sounds like Kaplan’s plea agreement is complex. However, his risk against going to jail for a long time seems to have been minimized. There may also be some recognition that he’s already spent a significant amount of time behind bars.” Last August, William Hernan Lenis, Will Lenis, and Manny Lenis became the first BetOnSports staffers to admit guilt. The trio advertised the online sports betting outfit; one stunt involved bringing an RV to a St. Louis Rams game in 2002, enabling fans to place bets before entering the stadium.
In June, the Southern District of New York (SDNY) seized over $30 million in payments destined for more than 24,000 online poker players in the United States, marking one of the first times that the industry has been the target of federal law enforcement actions. Brennan explained, “Under the new administration, there has been no softening of the stance by the Justice Department towards internet gambling. When you look at what happened with Kaplan and what’s happening with the SDNY, it may be discouraging to those who thought that with the new administration, there would be less hostility towards internet gambling.”
On Friday, attorneys for Account Services will appear in the Southern District of California calling for the return of $14 million seized by the SDNY in June. Recently, Douglas Rennick, an individual associated with the company, was indicted on bank fraud, money laundering, and illegal gambling charges. He faces up to 55 years in jail and $1.75 million in fines. Brennan forecasted, “I’m sure that during the course of Friday’s hearing, there is going to be some discussion that the Department of Justice may prefer to see the criminal matter resolved before any civil action can move forward.” The Poker Players Alliance (PPA) has submitted an amicus brief in the case outlining that poker is a game of skill and therefore not illegal gambling.
FBI Special Agent John Gillies noted that Kaplan’s guilty plea was monumental: “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.”
