Recently Sportingbet PLC, a British online gambling company, agreed to pay $33 million to settle a United States investigation over alleged illegal Internet gambling. Part of the settlement includes not to criminally prosecute Sportingbet for crimes, apart from tax violations, related to Sportingbet’s Internet gambling business with US customers from 1998 to 2006, according to the US Justice Department.
The company, which is traded on the London Stock Exchange (SBT), is the latest to have publicly worked out a deal with the Justice Department in the wake of a widespread crackdown on Internet gambling in the country over the past few years.
Sportingbet is a leading interactive online gambling product company based out of the UK. The company principally engaged in the development and retailing of three types of gambling, namely, sports betting, casino gaming, and poker. In addition, the company also provides sportsbook products and a range of virtual games. It operates through its subsidiaries like Interactive Sports Limited, Sportingbet (Germany) Limited, Interactive Sports Limited, Sportingbet Australia Pty Limited, Internet Opportunity Entertainment Limited, and Platinum Management Advisors SA. It operates in 30 different markets across Europe, Australia, Canada, and South America.
In the past, several publicly traded companies operated Internet gambling sites in the US, even though the legality of online gambling was challenged by the Justice Department. In 2006, the US Congress passed a law making it illegal for financial institutions to process payments for online gambling.
The $33 million represents illegal Internet gambling proceeds that Sportingbet provided to US customers, said US Attorney Preet Bharara when announcing the settlement. He also stated that Sportingbet offered wagering on sporting events as well as casino and poker games. Sportingbet began using payment processing methods in 2001 designed to deceive US credit card issuers, which bar the use of their cards for Internet gambling. Sportingbet also took steps to mask payments of winnings to the US customers.
Prior to 2006, several publicly traded companies operated Internet gambling sites in the US, even though the legality of online gambling was challenged by the Justice Department. That year, the US Congress passed the Unlawful Internet Gaming Enforcement Act (UIGEA) making it illegal for financial institutions to process payments for online gambling. In response, many sites, including Sportingbet and the Gibraltar based PartyGaming pulled out of the country. Some privately held offshore companies continue to operated in the US and have seen business skyrocket.
SportingBet Gets off Cheap at Only $33 Million
PartyGaming (LSE: PRTY) pulled out in 2009 and agreed to pay $105 million to the Justice Department in an agreement that it would not be prosecuted. Anarag Dikshit, PartyGaming founder, plead guilty the previous year to one count and agreed to pay $300 million to the US government in lieu of serving time in prison. NETeller in a similar case settled with the US Justice Department with a $136 million agreement in 2007.
The United States Attorney for the Southern District of New York, Preet Bharara, said recently in a statement that Sportingbet had offered sports betting, wagering on poker, and casino games from 1998 until October 2006, hiding the transactions to credit card companies that disallowed their cards to be used for Internet gambling.
It took two years of negotiations to come to the settlement. Sportingbet’s attorney, Stuart Slotnick, the managing partner of national law firm, Buchanan Ingersoll & Rooney expressed the importance of the settlement being that Sportingbet will now be exempt from ever being charged for a crime by the Department of Justice for Internet gaming operations in the US. Furthermore, the settlement prevented Sporting bet from having to appear in court, as they were not prosecuted.
Perhaps the most valuable thing that will come out of a the $33 million in restitutions for Sportingbet and the other online gaming operators who have paid their debts to the US is that the path will be opened for these companies to re-enter the US gaming market should it become legal in the future.
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