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BetOnSports Founder Pleads Guilty

August 17, 2009

On August 14 one of the most followed online gambling prosecutions came to an end. Gary Kaplan, the founder of BetOnSports pleaded guilty in connection with charges of conducting illegal online gambling levied against him. His written statement pleading guilty to the charges was released by Acting United States Attorney Michael Reap. The judge will decide his sentence, which according to guidelines should be between 41 and 51 months in prison. Kaplan has been in custody for the last 29 months. Hence he could spend another year or two in jail. In addition he will forfeit the $43.65 million held by the authorities.

Reacting to this news FBI Special Agent in Charge John Gillies said, “Gary Kaplan made millions of dollars by making it too easy for people to gamble away their hard earned money without having to leave their homes. 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.”

The Kaplan saga reads like a crime novel full of intrigue and backstabbing. He began in this field by running illegal sports betting operations in New York and Miami. In the late 1990s he set up offshore business entities in Aruba, Antigua and Costa Rica, which provided sportsbook services to U.S. citizens via the Internet and toll-free telephone numbers. In 2006 Kaplan was indicted for providing services illegal in the United States specifically through BetOnSports. The same year BetOnSports was forced to shut down and players lost $16 million. The Department of Justice claimed that their stand against the inherent dangers of online gambling was vindicated. However, industry experts claimed that this loss came about because, frightened by the comments that the Department of Justice was making against BetOnSports, the customers hounded the online gaming site out of business.

In March 2007 Kaplan was arrested in the Dominican Republic and faced 20 felony charges. Then the sordid part of the drama began. In April 2007 former BetOnSports CEO David Carruthers colluded with the Department of Justice and pleaded guilty to racketeering conspiracy and agreed to testify against Kaplan. His payoff was that he would receive a maximum prison sentence of 33 months. In May 2007 the business entity BetOnSports agreed to provide witnesses and evidence against Carruthers and Kaplan. In return, the Department of Justice assured the company that no further charges would be brought against any BetOnSports executives.

The present deal with the Department of Justice has Kaplan pleading guilty to charges of conspiracy to violate the RICO statute, conspiring to violate the Wire Wager Act and violating the Wire Wager Act. Kaplan does not however accept the validity of the law. He said, “Nevertheless, I do not agree with the U.S. stance against offshore telephone and Internet sports betting.”

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