The NCAA News - News and Features

March 16, 1998

FBI cracks down on offshore Internet gambling companies

In the first federal prosecution of sports betting over the Internet, the FBI has brought conspiracy charges against 14 owners and managers of offshore companies with sports betting pages, according to The Associated Press.

"The Internet is not an electronic sanctuary for illegal betting," Attorney General Janet Reno said in a March 4 statement. "It's a federal crime to use the Internet to conduct betting operations."

The defendants, including two former stockbrokers and a lawyer, let thousands of clients across the United States wager on professional and college sports events through six companies, prosecutors alleged.

U.S. Attorney Mary Jo White said the defendants broke a 1961 law making it a crime to use interstate telephone lines for gambling.

"Such blatant and widespread efforts to evade gambling laws cannot and will not be tolerated," White said at a New York City news conference.

The companies charged were located in the Caribbean and Central America, but some also had offices in New York City. White said 90 percent of their customers were in the United States.

The companies advertised their sites in magazines and through promotional mailings and their own World Wide Web sites. Bettors opened accounts with initial deposits of $100 to $500 and placed their bets via computers or over toll-free telephone numbers and were required to pay a 10 percent fee, authorities said.

Reno said the prosecution sends a message to betting operators everywhere: "You can't hide on-line and you can't hide offshore."

White said her office has sent letters to telephone companies directing them to discontinue telephone service to the companies involved in the prosecution.

If convicted, the defendants each face a maximum sentence of five years in prison and a fine of up to $250,000.