Last week saw two new developments in the ongoing debate over Internet gambling.
Betonsports founder Gary Kaplan, indicted along with his company last June for racketeering and conspiracy related to illegal Internet gambling, was arrested on Thursday in the Dominican Republic.
Kaplan, 48, was caught at a hotel in Santo Domingo following a "worldwide search," St Louis US Attorney Catherine Hanaway said Friday in a statement.
Betonsports, a London-based Internet sports book, and Kaplan were charged along with 10 others for violating US laws against Internet betting.
Prosecutors are seeking the forfeiture of $4.5 billion.
"Mr. Kaplan will enter a plea of not guilty and vigorously defend against these charges," said Kaplan’s lawyer, Benjamin Brafman, adding he’s been told "it will take several weeks" before Kaplan is transferred to St Louis.
Kaplan, charged with 20 felony counts, was sent to Puerto Rico to appear before a magistrate judge, who will be asked to order him transferred to Missouri. If convicted on all counts, Kaplan could spend the rest of his life in prison.
In a strange though unrelated development on Friday, the World Trade Organization declared the US ban on offshore Internet gambling payments illegal, upholding a previous ruling that allows for possible sanctions.
Shares of online gambling sites including PartyGaming rose after the WTO said the US ignored its previous decision that challenged the US law barring payments to gaming websites while allowing bets on its own soil.
Eight of the defendants, including former Betonsports Chief Executive Officer David Carruthers, cited the WTO position in a December 18 motion seeking dismissal of the racketeering and interstate wire-gambling charges. The judge hasn’t ruled on the request.
The defendants argued the prosecution violates the US government’s obligations under the 1995 treaty establishing the WTO. The defendants also dispute prosecutors’ claims they are guilty of racketeering.
Kaplan and his co-defendants are accused of engaging in racketeering, conspiracy and fraud arising out of the operation of gambling businesses such as Betonsports, prosecutors said.
"Gary Kaplan and Norman Steinberg, as the owners and operators of Betonsports affiliated Web sites and sportsbooks, took, or caused their employees to take, bets from undercover federal agents in St Louis, who used undercover identities to open wagering accounts," Hanaway said.
Steinberg is still at large, as is codefendant Peter Wilson, Hanaway said. Carruthers was apprehended in Texas in July. He and six other defendants appeared in federal court on July 31 and entered not guilty pleas. A not guilty plea was entered by the court on the company’s behalf in January.