Internet Gambling CEO Arrested by FBI

tightpoker writes to mention the news that several key individuals associated with online gambling site BetonSports have been indicted in a Missouri courtroom. Founder Stephen Kaplan, CEO David Carruthers, 9 other people and four corporations have been charged with crimes ranging from racketeering to fraud. The Sunday Time reports on the story as well, addressing fears this may be a prelude to a crackdown on all online gambling by U.S. law enforcement. From the article: "Nigel Parson, leisure analyst at Williams de Broë, said the move would 'throw online gambling stocks into a spin,' adding: 'David Carruthers is a prominent advocate of online gambling. The fear that this is an escalation of the anti-lobby will trouble markets.' Greg Harris, an analyst at Cannacord, said: 'It is too early to say if this is part of a broader strategy on prevention of internet gambling in the U.S. or if it is the Department of Justice flexing their muscles and trying to influence legislation.'"

Comments

It's only a matter of time

[vijayiyer]

internet gambling does not allow the government to take their cut and is therefore in direct competition with them. Expect many more such crackdowns soon.

Re:It's only a matter of time

[Jtheletter]

If by values voters you mean Indian casinos contributing to campaign coffers. It's interesting to note that many of the reps against online gambling seem to have no problem at all supporting local tribal casinos. It's all about who's greasing palms and playing nice with the government (ala taxes).

Re:It's only a matter of time

[Usagi_yo]

The U.S just arrested a CEO of a foreign Corporation for doing internet business that was contrary to U.S law. Next time we complain about Google or Yahoo bending over backwards to adhere to Chinese law, we should take into account our own policies.

Of course they lost

[Anonymous Coward]

The government gets a healthy cut from the earnings in Las Vegas and Atlantic City. Politicians get hefty contributions due to the earnings from Native American casinos. And lotteries like Powerball are the government's own game.

So it's no wonder that online gambling sites lose, and will continue to lose in court. You've got to pony up to the bosses if you want to work in this town. (Preferably, both Democrats and Republicans.)

YRO

[LunaticTippy]

I see it like this: Some people think they should have the right to gamble online. Other people think they shouldn't. Other people yet might think gambling online should be legal, but taxed and regulated.

Right now, there is no such thing as legal online gambling in the US. Because of that, all online gambling businesses are breaking the law. This particular case might be cut and dry, but the larger issue of our rights online can still be debated.

I think gambling is a tax on people who are bad at math, and should be 100% legal.

Re:YRO

[Zzesers92]

Right now, there is no such thing as legal online gambling in the US. Because of that, all online gambling businesses are breaking the law.

wait one minute there.... the absence of a law legalizing online gambling does not, in fact, make the activity illegal. There's no law legalizing mowing your yard (oh God, at least I hope there's not!), but it is legal to do so. IMO, gambling is something should remain regulated at the state level regardless.

On the other hand, I'm not a lawyer. Maybe the Federal government has a law criminalizing online gambling. But it seems like these guys are (like most of the "gambling bad guys" from yesteryear) getting hit with TAX law. That doesn't make online gambling illegal, the Feds have just make it impossible to run an online casino AND pay federal wager taxes on the income. Who's the real crook? Note they're dragging years of non-online gambling into this story as well, trying to make a case against online gambling by throwing traditional bookmaking in the mix.

For me, if they get these guys for not paying US wager taxes on gambling wages placed by US citizens, then any online retailer who only collects Sales Tax for the state their entity exists in should be charged with racketeering too.

missing the point?

[dm0527]

A lot of the comments revolve around the obligatory "here goes the government again" comments.

Perhaps I'm a bit naive, but it seems obvious to me that jumping on some website hosted in some third-world country and giving them my credit card so I can play poker through some system controlled by the website against God-knows-who just seems like an invitation to get ripped off.

I'm just not surprised in the least bit to hear some online gambling site shut down or involved parties being arrested for fraud or whatever. Frankly, I'm surprised it's taken this long for some government somewhere to actually look at these sites and realize that there is no way at all to stop the owners thereof from ripping off customers coming and going (aside from the massive amounts of money they make simply from the actual gambling itself).

I've got one of the smallest lists of "things I love that our government has its fingers in", but you should also realize that along with the money the government collects around legalized gambling in the US, they also regulate it massivly and crack down fast and hard on places that are ripping people off (above the fact that gambling itself is a ripoff).

- dm

Here's The Truth

[Chagatai]

The real reason they were arrested was because Uncle Sam was unable to tax them. Think about it. Americans are spending $4.5 billion per year towards online gambling sites like these that are located overseas. The government would like a slice of that pie, but they are unable to tax that revenue because the foreign companies don't fall under the jurisdiction of the IRS. Consequently, Congress brings up a whole bunch of warnings and laws about being unable to gamble online. And what better way to cut it off than to arrest CEOs who step foot on American soil?

Control. That's what it's all about.