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Internet Gambling Company BetOnSports Pleads Guilty to Racketeering

Internet gambling company BetOnSports PLC has pleaded guilty to federal racketeering charges, U.S. Attorney Catherine Hanaway announced Thursday.

Hanaway's office has been pursing a 22-count criminal indictment against the London-based company and its top executives since last July. Her office settled civil charges against BetOnSports in November that permanently bars the company from accepting any bets from gamblers in the U.S.

BetOnSports' founder Stephen Kaplan and Chief Executive David Carruthers remain under arrest and the company's plea deal won't end their prosecution, Hanaway said.

BetOnSports refused to send attorneys to criminal hearings in St. Louis federal court, claiming that Hanaway had no authority to charge the foreign company. The company took a majority of its bets from U.S. customers, but processed the wagers in offshore offices in Costa Rica and elsewhere.

"This plea constitutes a submission by the company to the U.S. justice system," Hanaway said in a statement. "This plea, combined with the terms of the civil junction should put an end to the BetonSports illegal gambling empire."

The case has been closely watched by the online gambling industry, which generates about $6 billion annually in the U.S.

Jeffrey Demerath, an attorney representing BetOnSports in St. Louis, didn't return a message seeking comment.

Hanaway agreed to drop any further criminal prosecution of the company. In return, BetOnSports must supply witnesses and evidence in the pending case against Carruthers, Kaplan, and other lower-level defendants in the company.

Sentencing for BetOnSports is set for Oct. 19.

The company faces a fine up to $500,000 and possible forfeitures. The company is also subject to a permanent injunction that requires it to repay wagers received from U.S. gamblers held by the company as of June 1, 2006.

Kaplan has a detention hearing scheduled for Friday morning before U.S. Judge Mary Ann Medler in St. Louis. Kaplan was arrested in March in the Dominican Republic and is charged with felony racketeering and fraud.

The charges are filed using a 1960s-era law known as the Wire Act that prohibits placing bets on sports events over the phone.

Carruthers was arrested in July, shortly after Hanaway unsealed the criminal indictment against the company, which is publicly traded.