The future of the online betting firm BetonSports was thrown into doubt yesterday when it pulled the plug on its US operations, which account for three-quarters of its business, and laid off 800 people in Costa Rica and Antigua from where the US service was run. The move sparked fears US gamblers would lose their $146m (£77m) deposits.
The company said it had reviewed its options after a restraining order from a US federal court prevented it from taking any bets from US customers, and decided the US-facing operations were no longer viable. BetonSports had tried to persuade the US Department of Justice to lift the order. It has fired its chief executive, David Carruthers, who remains in jail in the US after being arrested while changing planes in Texas. He and seven others have pleaded not guilty, in the US District Court in St Louis, to charges of running an illegal sportsbetting operation.
A BetonSports spokes-man denied reports that the liquidation of the firm would begin over the next 90 days. He said: "The board believes it has sufficient assets to settle its liabilities in an orderly manner." The group, which has been losing about $4m a day since the restraining order, said it would meet redundancy costs, pay back creditors and repay balances due to US customers. It admitted this depended on its ability to persuade banks and cash processors to release its funds, and its ability to unlock funds from outside the Caribbean and earn sufficient profits from its Asian operations.
All that is left of the business are the Chinese websites that were acquired in the spring, leaving analysts sceptical about the company's future. Greg Feehely, at Altium, said: "This is pretty much a worst-case scenario for shareholders. The group's Asian-facing businesses may need to be sold to settle all outstanding liabilities leaving little or nothing for equity investors." He added: "The board didn't put up a fight whatsoever. I wouldn't be surprised if some of the shareholders sued them."
Under the restraining order, BetonSports must return any money that American customers have tied up with the site. The order expires on Monday but could be extended.
While the company pledged that customers would get their money back, it is by no means certain that it will have enough funds. The uncertainty is likely to trigger fears among other gamblers that they could lose their money if other companies are caught up in the US crackdown on the sector. In an online gambling forum, gonegambling.com, one worried punter asked yesterday: "Could this happen to all online casinos and sportsbooks?"
Customers who rang the BetonSports helpline yesterday were put through to a radio station and treated to soft rock music.Reuse content