Advertising Agencies and Their Executives Caught In Internet Gambling Crackdown

On July 17, 2006, U.S. prosecutors announced that they had arrested David Carruthers, the CEO of BetOnSports, PLC at Dallas-Fort Worth International Airport. BetOnSports is a publicly traded widely advertised online gambling portal that owns a number of offshore Internet Sports books and casinos. BetOnSports counts U.S. bettors as the overwhelming majority of its customers. The federal government has taken the position that "commercial gambling across state and international borders is a crime."

According to the US Attorney's office, the arrest arose from a 22-count federal grand jury indictment returned in St. Louis Missouri. The indictment charged eleven individuals and four corporations on various charges of racketeering, conspiracy and fraud. Included in the indictment were charges against BetOnSports, its founder, Gary Stephen Kaplan, as well as other individuals associated with BetOnSports.

While criminal charges against Carruthers and other BetonSports personnel made headlines, included in the indictment were criminal charges against lesser-known companies -- Direct Mail Expertise Inc., DME Global Marketing and Fulfillment Inc. and Mobile Promotions Inc. These defendants were advertising agencies based in Florida. Not only did the government charge the advertising agencies, but also charged were individuals who owned and operated them. Several defendants are now in custody and arrest warrants have been issued for the other defendants. As part of its case, the government is seeking forfeiture of all defendants' assets, down to their cars.

What should be troubling to those in the advertising and direct marketing industries is that the Florida-based advertising defendants do not appear to have been engaged in gambling or similar illegal activities. Nevertheless, they are facing serious criminal charges because they performed promotional marketing services for clients that were engaged in a questionably illegal activity - offshore Internet gaming. Their unlawful activities are alleged to have included disseminating advertising in the United States and online to direct traffic to websites such as and telephone call centers, including such innocuous direct marketing activities such as mailing brochures, coupons, and flyers, and placing print, radio and television advertising.

Because the Florida defendants all faces counts of racketeering, conspiracy and fraud for providing and promoting illegal gambling even though they presumably did not undertake activities more than carrying out advertising-related services, advertising agencies and service providers must take these events as a loud wake up call. This includes lists managers and brokers, telemarketing call centers, printers, and all others who assist the challenged activities. The federal government has made it clear that it will go after those who assist companies engaged in illegal activities, such as gambling, even if those activities are legal in the countries in which they are occurring.

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