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I hate days like this. I read all day long and couldn't find a single thing I wanted to write about. Hours upon hours of reading and nothing. Every single article that was even remotely interesting was about the Betonsports scandal rocking the internet gambling industry. David Carruthers, the CEO, was arrested last month while on a flight change-over in the United States and charged with racketeering and fraud. The company is also being charged and the owner, Gary Kaplan, is somewhere out there waiting to be found and extradited. There were articles about how they laid-off 800 people in Antigua and Britain. Articles about how rumors say the company is actually closing down. Details regarding the forfeiture of $4.5 billion dollars (3.5 billion euro), plus several cars, recreational vehicles and computers from Carruthers and 10 other people associated with the gambling operation. While I may write in more detail about this tomorrow I didn't want to write about it today. I wrote about this all last week and I wanted a break, be it small, from the topic. So I read, and I read. After my eight hour day I gave up. Why should I continue when it's obvious nothing was coming? The thing is that I need to write for work. This is what I get paid for so this lack of subject kept niggling on my mind and wouldn't let me go. Finally the kids are in bed, the hubby is asleep and I'm tossing and turning because I couldn't find a subject for my article today. Bloody hell, it's midnight and I'm reading some more. Suddenly I saw it, "Betcorp hangs up on American punters". The Times Online has an article concerning another "AIM-listed online gaming company" which has stopped taking bets via phone from the United States. I wanted to double check what type of company it was (I had a good guess, as I really only know the online casino world I figured it wasn't one of those) so I went to betcorp.com. Only betcorp.com isn't a betting company, it's the Boston Telephone and Electric Corporation. After having a laugh about how strange that was I Googled Betcorp and found they are a sportsbook with an au (Australian) address. I don't understand why they were accepting telephone bets to begin with. The 1961 Wire Act specifically states no telephone bets are accepted. The whole point of the 1961 Wire Act was to kill telephone sports betting. Fortunately for them telephone bets account for only nine percent of their revenues. US players are up to 85 percent of their business, however. As such if the US government decides that US players can no longer play via the internet we can kiss Betcorp goodbye. Betcorp is currently listed in AIM (the London small stock exchange) and they plan on staying in there. As such they did the bare minimum to make sure they stay out of the US's radar. Meanwhile they are watching the proceedings against Betonsports with keen interest. Colin Walker, the chief executive, said "We're registered in Antigua, where we take bets. The view we'd understood from our legal advisers was that we had been acting legally and appropriately. Recent events have cast that into doubt." I'm not a lawyer and I understood what the Wire Act meant by no telephone bets. You don't need to be a genius to understand that no phone bets means don't allow people to place money via the telephone. This isn't even the first time a sports book owner has been arrested and charged for allowing phone bets. Jay Cohen spent two years in jail for this. Where was the legal council for Betcorp when they looked into this issue and advised their client? I have a few choice suggestions for where they might have been, but that's because it's late and I'm punchy so I'll leave it to your imagination. Let's just say it wasn't nice. The arrest in Texas last month didn't just affect Betcorps decision to stop accepting phone bets. It also took a big bite into their stock value. Their shares went down forty percent after Carruthers arrest. Ouch. Surprisingly the company decided to take steps to save their assets. In addition to minimize the legal risks and closing down their telephone bets they are now focusing on expanding their markets outside of the US. What I really liked was how they were quoted that they were minimizing their US risks by making changes "to the maximum extent practical". It would be impractical to shut down their US market completely as that is more than the bulk of their business. However they can spare that nine percent in order to show the US they are willing to make an effort. Walker gave the press some nice lip service regarding Betcorps stock. "Trading has been very good. It's a big marketplace. We feel it has been very positive across all areas." The company statement admitted that cutting off their telephone bets for US customers will have "an adverse effect on sports betting turnover but will partially offset by personnel and telecommunication cost reductions and the migration of telephone activity to the internet." While Betonsports laid-off 800 people, Betcorp will have to let go only "a handful." They added, "We anticipate that the overall effect on profitability will not be material." Betcorp was daft to allow telephone betting from the United States in the first place. With that said I'm extremely pleased that they have stopped accepting telephone bets from the US. Internet bets are in quasi-legal territory as the internet wasn't even invented in 1961 when the Wire Act was written. This is why the Department of Justice is focusing only on companies which have blatantly broken the law. There's a chance they would lose against an internet casino which only allows for bets via the internet. It's this loophole that Congress is trying to clarify and fill with their current anti-internet legislation. Betonsports may have lost the war, but for the moment Betcorp will live to see another day. Related Links: Posted on: August 14, 2006
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