14 Charged in Internet Betting
By Sharon Walsh
The managers and owners of six Internet sports betting companies that operated offshore and allowed bettors in the United States to gamble on football, basketball and other sports were charged in federal court here today with illegally using the wires and telephone to transmit bets.
Although there have been a handful of state prosecutions, this is the first federal prosecution against businesses that allow illegal betting using the Internet, according to U.S. Attorney Mary Jo White in Manhattan.
"The Internet is not an electronic sanctuary for illegal betting," said U.S. Attorney General Janet Reno. "It's a federal crime to use the Internet to conduct betting operations. . . . You can't hide online and you can't hide offshore."
In previous media reports, the betting services have contended that they are beyond the law because they are located in countries where gambling is legal.
The 14 individuals accused of running the illegal betting operations were set up offshore in Caribbean or Central American locations where sports betting is legal. But authorities said it doesn't matter where the company is set up if money is wired or telephone calls are made from the United States.
Since 1961, a federal law aimed at organized crime has prohibited betting on sports using the wires or telephones. But now, there are several dozen companies running online betting operations, White said, and "gamblers can bet and win from the privacy and comfort of their own homes with the click of a mouse." The profits from the book-making has grown to millions of dollars, she said.
As many as 40,000 calls were made to the services in January, with heavy calling around Super Bowl Sunday, White said.
The FBI's computer crime unit, in existence for only two years, has been surfing the Net for criminal activity. It found that the Internet betting companies advertised in popular sports magazines, on Web sites and in promotional mailings within the United States. One company, SDB Global, operating from Costa Rica, said in its ads: "Account is private and secure. Not open to inquiry by government agency. . . . Same bets, same odds, and same payoffs as Las Vegas! . . . Virtually no limits. Call if over $300,000."
The bettor opens an account with one of the services, usually with a deposit of $500 sent by bank wire, Western Union, credit card or certified check. Then, the bettor can risk a minimum of $10 if betting on the Internet, or a minimum of $50 if the transaction is over the phone, to bet on professional and college sports such as basketball, hockey, baseball and football . The betting service keeps 10 percent as its fee.
The bettor's winnings are sent by check or wire transfer to the gambler's account in the United States.
One of the defendants, Kerry Rogers, told the Associated Press the practice was legal and the charges were ridiculous. "They've got guys shooting people up in New York," he said. "Don't they have anything better to do?" Other defendants couldn't be reached.
During the investigation, which is continuing, undercover FBI agents from the computer crime squad used the Internet sites for each of the six companies charged from their offices in Manhattan.
Agents placed 45 bets of $50 each over the past seven months. They won only 18 of the bets.
Today, two of the 14 men were arrested. Two others were expected to be arrested; 10 are still in offshore locations and have been notified that they should turn themselves in. Each could be sentenced to up to five years in prison and fined as much as $200,000.
The Internet companies they ran are Island Casino and Galaxy Sports in Curacao, SDB Global and Real Casino in Costa Rica, World Sports Exchange in Antigua, and Winner's Way in the Dominican Republic.
© Copyright 1998 The Washington Post Company