BetonSports agrees to permanent shutdown
By Bradley Vallerius
BetonSports, which has not accepted wagers from American customers since July 19, is already completing the closure of operations in Costa Rica and Antigua. Trading of BetonSports' shares on the London Stock Exchange were suspended on July 17.
As part of the settlement, BetonSports must run an advertisement in a national newspaper informing readers that "it is a violation of United States law to transmit sports wagers or betting information using interstate or international telephone lines." The ad will also provide a toll free telephone number customers can call to redeem whatever funds they may have deposited with the company before its closures.
A similar message will appear on BetonSports' American-facing Web sites within a week, but a company spokesperson says he doesn't know when customers will actually be paid.
BetonSports operates a network of localized Web sites designed to target customers all over the globe, but American customers represented about 80 percent of its business. The company has been without that source of revenue for four months now, and it still owes a considerable amount of money to shareholders and hundreds of laid-off employees in addition to thousands of American customers.
The company is also likely to incur a hefty fine as a result of ongoing criminal proceedings in the U.S. District Court for Eastern Missouri, the same court that oversaw the civil proceedings.
BetonSports received a cash injection of $2.25 million this week by selling two gambling Web sites that target Asian customers back to their original owners. BetonSports acquired Hooball.com and 777ball.com in May of 2006, but legal problems prevented it from fully integrating the businesses or paying the outstanding consideration on the purchase price. BetonSports paid an initial consideration of $22 million for the two sites in May.
The company continues to earn revenue through gambling sites that target customers in Asia, primarily through Easybets.com.
BetonSports' troubles began in July of 2006 when CEO David Carruthers was arrested at Dallas Fort Worth International Airport while waiting for a connecting flight en route from the UK to Costa Rica. Unbeknownst to Carruthers, the U.S. Department of Justice had conducted a three-year investigation into his company's U.S. operations, resulting in indictments against himself, his company and several other employees. They face counts of fraud, racketeering, money laundering and illegal gambling.
Carruthers remains under house arrest in St. Louis while the criminal case continues.