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U.S. District Court Holds BETonSPORTS Money Hostage...By Jay Graziani

Tuesday, the United States District Court for the Eastern District of Missouri announced that any person "claiming interest" in the money received through BETonSPORTS founder Gary Kaplan's plea deal may file a petition to recover lost monies. Over the next 60 days, affected parties can file to recover their lost assets, to be paid from the more than $43 million seized by BETonSPORTS founder Gary Kaplan, who is now awaiting sentencing.

Unfortunately, and as usual, the bettors who had their funds stolen from them look to end up with the short end of the stick on this deal.

First, a quick recap for those who have missed the past 3 years of this ongoing drama.

BETonSPORTS was indicted by the U.S. District Court for the Eastern District of Missouri in July 2006, resulting in the arrest of CEO David Carruthers later that month. Founder Gary Kaplan went on the lam, but was picked up in March of 2007, after years of evading U.S. authorities interested in his extensive ties to offshore gambling.

Mr. Kaplan pleaded guilty last week to conspiracy and racketeering under the RICO act, agreeing to spend 41-51 months in prison and forfeiting $43.65 million. He'll wait until October 27th to be formally sentenced, making him the last of the 11 people indicted to settle the charges against him, and giving him nearly 2-1/2 years of credit towards his sentence since his incarceration in March 2007.

BETonSPORTS discontinued its American business interests shortly after the indictment, though U.S. players who had monies deposited at the offshore operator have yet to recover their investments. When BOS went belly-up in 2006, players lost an estimated $16 million in funds.

Vantis, a UK-based accounting group, was appointed as liquidators of the BETonSPORTS assets by the High Court in Antigua and Barbuda in February of 2008. In their latest update, dated July 23, 2009 (, the group claims to have located approximately $2 million in assets against nearly $25 million in filed claims. The group has not paid a dividend at this time (estimated at 5 cents on the dollar) as they pursue the identification of further potential assets.

With the nearly $44 million confiscated from Kaplan, enough money would seem to be available for BETonSPORTS to settle up their debts with owed players. The Daily Riverfront Times of St. Louis sought clarification from the U.S. District Court and reported Thursday that gamblers are not entitled to a piece of the BETonSPORTS fortune.

So if bettors, creditors, and former employees are ineligible to receive these recovered funds, who exactly stands to benefit from this prosecution? The answer should come as no surprise to anyone following the online gambling tug-of-war that has slowly been winding through the U.S. court system.

The funds in question are seen as "illegal criminal proceeds", not recovered assets from a bankrupt corporation. The prosecution predictably views Kaplan as a governmental cash cow, with the lead prosecutor, Steve Holtshouser, stating earlier this week that "the biggest beneficiary will be the U.S. taxpayers. They will get back more than it cost to prosecute this case, and then some."

The ethics of the U.S. government claiming a windfall while hundreds, if not thousands, of swindled gamblers are left empty-handed is questionable at best. But this standpoint has been the status quo in the federal government's "war" on online gambling, as prosecutors have seemed to be more interested in filling the federal coffers than seeking justice for those who have been wronged by the yet-unregulated online gambling industry.

Peter Wassell of Vantis plc and Joint Liquidator of Betonsports PLC, BoS (Antigua) Limited confirmed via email that Vantis "has a dialogue" with the U.S. Department of Justice and "will seek to do whatever we can to ensure that the BETonSPORTS creditors' interests are protected in these proceedings" without providing further details.

So what are those owed money by BETonSPORTS supposed to do now?

Despite the prosecutors dismissal of individual bettors, players owed money may still file a petition with the U.S. District Court which describes "the nature and extent of the petitioner's right, title or interest in the forfeited property, the time and circumstances of the petitioner's acquisition of the right, title and interest in the forfeited property and any additional facts supporting the petitioner's claim and the relief sought". While this sounds simple in theory, the average internet gambler has a lot to consider, including whether any petition will result in any tricky legal morasses.

Petitioning the court to recover losses from an illegal gambling site of course implies that you placed bets through an illegal site. While the federal laws regulating gambling can be debated, most agree that they only affect the person taking the bets, not the one placing them. State laws, however, may vary and admitting to what may be considered a crime in some jurisdictions is not necessarily in a bettor's best interest. Furthermore, the IRS will undoubtedly be looking very closely at anyone who claims ownership of large amounts of money confiscated from unregulated offshore casinos.

The most prudent course of action at this time would seem to lie with Vantis, who may have a chance to recover some additional funds on account of bettors. Of course, there is no assurance that Vantis' list will avoid the eyes of U.S. legal and tax authorities, and even less assurance that the Department of Justice will make any confiscated funds available to the liquidators. Nonetheless, any bettors who still hold dreams of recovering their BETonSPORTS funds would be best advised to file a claim with Vantis and hope for the best.

Jay Graziani

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