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BetOnSports shutting U.S.-focused operations

BetOnSports PLC, the British-based Internet gambling company said Friday that it will shut down its services for American gamblers.
/ Source: The Associated Press

BetOnSports PLC, the British-based Internet gambling company that has been charged with fraud and racketeering in the United States, said Friday that it will shut down its services for American gamblers.

BetOnSports said it plans to stop operating in Costa Rica and Antigua _ from where it accepted wagers from tens of thousands of customers in the United States _ as soon as possible following a U.S. federal court order for the company to stop taking bets from the country.

The bookmaker said the decision would allow it to gain more sales from outside the United States, in Europe and Asia, to help it pay creditors.

However, Wayne Brown, an analyst at Altium said the decision was the "worst case scenario" that effectively spelled the end of the company, which currently generates almost three-quarters of its business in the United States.

The company took in wagers of $735 million and had 50,000 active players in the first quarter of this year.

Brown said an attempt to focus on the company's Asian operations was unlikely to succeed.

"Asia provides around 5 percent of profits and is very small in the scheme of things," he said.

Internet betting is illegal throughout the United States and authorities there have targeted BetOnSports in a clampdown.

Last month, the company's former chief executive David Carruthers was arrested at a Texas airport and a 22-count indictment was unveiled in St. Louis, Missouri, alleging fraud and racketeering against the company. The federal court also ordered the company to stop taking U.S. bets and return deposits paid by American bettors.

Shares in the company were suspended on the same day. They were worth around $234 million when they were removed from active trading.

In a statement issued to the London Stock Exchange, the board of directors said Friday that "after thoroughly reviewing possible alternative business plans, they no longer consider the U.S.-facing operations of the company ... to be viable."

The company also pledged to refund the deposits of its U.S.-based customers, many of whom have uncollected winnings that must be transferred through third-party agencies based outside the United States.

The directors said they wanted to refund all customers' money, but cautioned this would prove difficult and "will depend upon the company's ability to persuade banks and cash processors to release its funds."