Brief: BetOnSports Folds Its U.S. BusinessBrief: BetOnSports Folds Its U.S. Business

One reason so many online gamblers in America flocked to BetOnSports was because the payoffs and the odds were generally better than those offered by online casinos based elsewhere. But with the closing of the online casino, the fate of some customers' accounts is unknown.

BetOnSports said Friday that it will shut down its U.S. business. While the company said it will attempt to pay its liabilities including its U.S. customer balances, a $4.5 billion penalty by the U.S. government looms over the embattled Internet operation.

BetOnSports said it will close its offices in Costa Rica, where much of its support staff is located, and in Antigua, where its servers process transactions in an effort to avoid U.S. law enforcement jurisdiction. The majority of BetOnSports' customers are located in the U.S. The company said it will move most of its operations to Asia.

The online gambling operation began to unravel in last month when U.S. authorities arrested its chief executive David Carruthers in Dallas as he was changing planes on his way to Costa Rica. In short order, he was dismissed from his position, then indicted. He was still in custody in St. Louis Friday.

In an announcement, BetOnSports said it will seek to have its banks release its funds so it can honor its debts. The company's statement said its directors "intend that the Company should pay any liabilities to staff and creditors in an orderly manner; and repay balances due to U.S. customers in an orderly manner."

While U.S. prosecutors are basing their case against BetOnSports on the Federal Wire Act of 1961, the legislation is open to interpretation. Carruthers and his attorneys maintain the legislation doesn't cover BetOnSports. At the same time, Congress has been grappling with the online gambling issue, but hasn't yet passed any new legislation that would outlaw or regulate online gambling.