David Carruthers, former CEO of BetOnSports, discovered the significance of that difference during a recent layover at the Dallas/Fort Worth airport, where he was arrested for helping Americans bet on sports. His arrest is part of a larger attempt by the U.S. government to impose its brand of repressive paternalism on countries with more tolerant policies.Carruthers was on his way from London, where his company is headquartered, to Costa Rica, where its online betting operations are based. The business is perfectly legal in both of those places, but not in the United States. And since most of its customers are Americans, Carruthers is guilty of about 20 different felonies.
Or so the FBI and the Justice Department say, and they're the ones with the guns and handcuffs. Catherine Hanaway, the U.S. attorney for the Eastern District of Missouri, accuses Carruthers and 10 other people associated with BetOnSports, including company founder Gary Kaplan, of violating the 1961 Wire Act, which prohibits using "a wire-communication facility" to accept bets on "any sporting event or contest."
Leaving aside the question of whether the Internet counts as a "wire-communication facility," online bookmakers in other countries argue that the U.S. prohibition does not apply to them simply because some of their customers are Americans. If a betting operation is based in Costa Rica, they say, that's where the betting takes place, even if the customer is using a computer in St. Louis.
The Justice Department disagrees, and on this difference in interpretation it has built an indictment that could send Carruthers to prison for decades. While a Wire Act violation carries a maximum penalty of two years in prison, a "racketeering conspiracy" involving such a violation can be punished by a prison term of up to 20 years. So can "mail fraud," which BetOnSports supposedly committed by advertising that it is "legal and licensed" -- never mind that BetOnSports is legal and licensed in the countries where it operates.
Despite the talk of fraud, BetOnSports is not accused of ripping off its customers. This case has nothing to do with consumer protection, except in the sense of protecting consumers from their own desire to bet on sports.