We posted a report on Thursday from the Queens County District Attorney’s Office in New York stating that law enforcement officials throughout the country organized to bust a huge gambling ring and had some 27 of thirty defendants in custody. The operation called “Operation Betting It All” apparently had been ongoing for 38 months – more than three years! This story hit the newswires and almost every news outlet on TV and print, as well as Internet pundits, latched onto it.
Why? Because the government is continuing its scare tactics, so that gamblers will not play offshore or with online bookies. And, what better way to spread the word of the evils of Internet gambling than to have a headline that includes the words multi-million dollar, Internet gambling and the coup de grace, organized crime.
Every report we found, from this one at NY1 to the Associated Press, loves to say a ‘half a billion dollar’ operation and feels the need to indentify Joe Fafone as a Gambino associate. The government claims to have already seized 3 million in assets and are looking for $125 million more from the defendants. Pretty good haul for New York’s coffers if it really pans out! The government has already gotten huge amounts of money from some of their strong arm tactics and recent arrests just this year – $34 million from ex-BETonSPORTS headman Gary Kaplan and $105 million from PartyGaming, the online poker and casino operator, who agreed in April to pay a penalty as part of a “non-prosecution agreement”. In addition, the government is not done shaking down foreign corporations as Sportingbet PLC believes that it will also reach a settlement with the U.S. DOJ this year.
After reviewing the document from the Queens D.A., which reads more like a feature article than a press release, it appears that the target of the investigation was Joe Fafone and an alleged sports betting credit operation that ran across several states here in the U.S. However, the D.A. appears to have blurred the lines between a long-standing credit operation and the post-up shop in Panama. In addition to identifying several credit shop websites, the press release also mentions industry giant BetOnline.com. The release states that the defendants were unlawfully operating a sports betting enterprise that stretched from Queens County to Nevada and from Rochester to Florida. However, BetOnline is a Panama corporation and does not offer credit to any players.
It also appears that the government has been following the Fafones for some time. A quick search provided “Operation Goodfellas” from 2002 where Joe Fafone and his father were linked to organized crime and an Internet betting operation in Costa Rica. So, it does not appear that the Panamanian sportsbook was being targeted, more like the guy the government claims to be the head man.
There is nothing new or unique about these kinds of indictments. There have been many similar charges and convictions in the past ten years. In 1999, a federal grand jury in Manhattan charged Jay Cohen, one of the owners of World Sports Exchange, with conspiracy to violate the Wire Wager Act and seven other counts. Ronnie Sacco, BetWWTS, Rick from Gold Medal and others have all been caught in the crosshairs of ambitious prosecutors looking to gain publicity in the news. All of these operations either stayed in business or been sold to reputable operators. And of course, the biggest splash ever made by U.S. officials, affecting over 70,000 bettors, was the 2006 arrest of BETonSPORTS CEO David Carruthers and subsequent meltdown of the company.
Though this is a significant arrest, does the government ever hear what they are saying? Queens District Attorney Richard Brown stated at the press conference, “In this case, I believe that we will make a significant dent in the illegal gambling nationwide.”
Really? I would wager that 95% of the players using this operation either 1) have another bookie, 2) have an Internet post-up account or 3) are looking for another bookie to play with . . . right now! The websites mentioned in the press release are all still operating and from what we have found out, will continue to operate; As will the thousands of other gambling sites that U.S. citizens can play at. And, as far as local bookies in NY and FL, I am sure that their services will be offered to any of Fafone’s alleged customers.
The bottom line is that this latest arrest is just another in a long series of government moves to stop something they can’t prevent. Illegal street bookies have been getting busted since the leather helmet days, yet every town nationwide has at least one. The largest U.S.-facing sportsbook was taken down and more sites have continued to pop up and take bets from U.S. players. Someday, we hope that the government realizes that gamblers are going to play, to bet, to wager. The only way for the government to get involved (read tax) other than the occasional arrest, is to regulate and tax the Internet industry and allow sports betting in U.S. land-based casinos. Maybe then, alleged ‘Mob connections’ won’t be booking a half a billion in wagers. But, there would also be no headlines to grab.
Ultimately, we wish all involved the best of luck in facing these charges. And, we expect this situation to play out very similar to the Jay Cohen/WSEX case, where the corporation located in Panama will continue to operate, while the alleged principles wade their way through the U.S. judicial system.