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BetonSports Folds U.S. Hand

Betonsports.com is folding its U.S. hand.

With the British-based company named in a 22-count indictment for violating American gambling laws and its former CEO sitting in a St. Louis jail, BetonSports said Friday it was permanently cutting off access to its site for U.S. bettors.

The site has been dark for American online gamblers since last month when a U.S. court issued a temporary restraining order against BetonSports.

The London Stock Exchange suspended trading in the company's shares on July 17, shortly after a U.S. court unsealed the indictments against BetonSports and 11 current and former officials of the business.

In a statement issued to the London Stock Exchange, BetonSports said it hoped to refund balances to U.S. gamblers and to pay some salaries of employees in Costa Rica and Antigua, where the company's offshore operations are located.

Those payments, however, "will depend upon the company's ability to persuade banks and cash processors to release its funds."

BetonSports' problems began with the arrest of David Carruthers, the then CEO of the company, who was changing planes in Fort Worth, Texas, en route from London to Costa Rica.

A week later, Betonsports fired Carruthers because of his continued detention by U.S. authorities. Carruthers remains in jail while his lawyers negotiate bail terms.

The Department of Justice (DoJ) contends BetonSports violated U.S. law by taking sporting bets over the telephone and the Internet from U.S. citizens.

"Illegal commercial gambling across state and international borders is a crime," U.S. Attorney Catherine L. Hanaway of the Eastern District of Missouri said in a statement released with the July indictments.

"This indictment is but one step in a series of actions designed to punish and seize the profits of individuals who disregard federal and state laws."

Under U.S. law, the Wire Act prohibits making gambling wagers over the telephone. Approved by Congress in the 1960s, the legislation did not anticipate the Internet, creating a legal gray area for online gambling.

The U.S. Department of Justice (DoJ) maintains the Wire Act also covers placing bets over the Internet, and in July the U.S. House Representatives passed a bill extending the Wire Act to all forms of online gambling.

Along with Carruthers, the U.S. indictment names Gary Kaplan, the founder of BetonSports.

Kaplan is charged with 20 felony violations of U.S. laws, including the Wire Act, Racketeer Influenced and Corrupt Organizations (RICO) Conspiracy, interstate transportation of gambling paraphernalia, interference with the administration of Internal Revenue laws and tax evasion.

In addition, Kaplan is charged with arranging for Florida-based DME Global Marketing and Fulfillment to ship equipment to Costa Rica from Florida for BetonSports.

Kaplan remains a fugitive.

BetonSports contends the allegations contained in the indictment occurred prior to the time the company went public in 2004.

The company also claims Kaplan has only a consulting agreement with BetonSports and is not involved in daily operations.

According to the DoJ, BetonSports in 2003 had 100,000 active players who placed 33 million wagers worth $1.6 billion through the company's Web sites.

More than half of those wagers came from Americans.