The other day I was contacted by someone who is familiar with the BetonSports (BoS) situation and wanted to set the record straight. The person agreed to speak to me only on the condition of anonymity, but assured me that he/she is quite famaliar with the particulars of the company. Having read my piece on Vantis and the pending distribution of funds, the source wanted it to be known that more money may be available. However, before getting into all the details it would be useful to examine the history of BoS leading up to the liquidation. The following is a chronology of events according to the source with some backup from public records.
BoS, at the time called NASA sportsbook, started up in the 1990s with offices in Antigua and Costa Rica and was one of the leading offshore books. The company, spearheaded by Gary Kaplan, among others, used an ingenious combination of bookmaking skills and marketing to delineate itself as a prime offshore option for North American bettors. While many didn't approve of the loud and often direct advertising the company employed, without question it was effective. In the late 1990s the company split into 2 groups, with one group eventually becoming BetUS and the other operating as BoS. In 2000 BoS was extremely successful and was processing billions each year in handle. Kaplan envisioned a possible public offering of the company at some point in the future and hired David Carruthers, hoping that his notoriety in Britain may convince buyers to come forward. The company was very successful and in 2004 the company did go public, trading on the London AIM. 48.1% of the shares were offered to the public and the majority of shares were held by company officials with Kaplan keeping approximately 13% of the shares. According to the source this public offering was the start of the downfall for the company.
The company gained almost $113 million from the public offering, but the new British directors decided to take the company in a new direction. Kaplan was kept on as a consultant, but the company attempted to diversify itself by looking at new markets, acquiring existing companies and most importantly playing little homage to its existing client base. To make matters worse, David Carruthers unwisely flaunted the company's success at the U.S. Department of Justice, advertising in U.S. papers that the government had no business interfering with citizens' actions in the privacy of their own homes. Carruthers, along with other sportsbook directors such as Mark Blandford of Sportingbet, essentially told the U.S. government that they were untouchable because they were not American citizens and were beyond the long arm of the DOJ.
In the meantime BoS purchased MVP Sportsbook, V Wager and Player's Only Sportsbook for $37 million and later acquired Easybets for $20 million in a failed attempt to capture the Asian market. Furthermore, Carruthers and the new directors began to hemorrhage money by lavish spending in an attempt to woo new interests. Included in this spending were stays in the most luxurious hotels with no expenses spared, numerous parties (including one sponsored at the Playboy mansion) and the sponsoring of a second rate NASCAR team with the logo of BoS Poker. The company also started to divest itself of American influence and began to hire from outside, particularly British personnel. In a 2005 press release the company announced the hiring of Scott Waller as Chief Technical Officer, William Griffiths as head of marketing and numerous others that replaced the successful team that was already in place. The "Britanizing" of the company was clearly an indication that the new management wanted to turn BoS into a company that resembled businesses like William Hill and Ladbrokes and less like the original NASA. The company further got into trouble with a disastrous 2005 football season which resulted in heavy losses and a reduction in their share price. By many accounts this disastrous season could be laid at the feet of the new management who really weren't familiar with their current clientele, or for that matter with American wagering. In typical British style, the company closed accounts of winners, reduced limits drastically and effectively drove away much of the business that got it where it was. While the company appeared to be flourishing thanks to the new volume from the newly acquired sportsbooks, it was mostly smoke and mirrors. The increased volume was strictly a result of the recent acquisitions---BoS itself was sinking fast. Kaplan agreed to help the company out by getting it refocused and growing with its existing North American customer base, but the British management was certain that the future success lay with the Asian market and making the company more British-like.
By mid 2006 BoS was in a huge loss position and desperately took on all customers to make the balance sheet look better. Consequently, charge backs went from under 1% to 13% which only further reduced the company's profits. Carruthers realized that the only possible way to survive was to get a loan from Barclays Bank. Barclays seemed prepared to loan the company enough to keep it afloat, but things changed drastically on July 16th, 2006. On that day David Carruthers was travelling with his wife to Costa Rica from Britain when his plane touched down for a layover at the Dallas-Fort Worth Airport. At that point the FBI arrested and charged Carruthers under the RICO act. The indictments against BoS which were issued in June 2006 and sealed were then unsealed after the arrest of Carruthers. 10 days later the company fired Carruthers as CEO, but they realized the Barclay's loan wasn't going to go through and for the most part BoS was a sinking ship. The DOJ later arrested Peter Dicks in the United States, and later that year issued an arrest warrant for Gary Kaplan. And finally, Kaplan was extradited from the Dominican Republic to the United States in 2007.
According to the source, this is where the chicanery began by the company directors. Realizing the company was going to be forced to shut down, the directors began to ship money, the bulk of its computers and other assets to the offices of Tamarindo Systems located in Ottawa, Ontario, Canada. According to the Corporations Canada website, Tamarindo systems was incorporated on December 5, 2005, but today is not operating. The source also indicated that Scott Waller had an interest in Tamarindo Systems. In 2007 Antigua's regulatory body appointed Vantisplc as the liquidators for BetonSports. Why Vantis was chosen is still unclear, but the source stated that no bankruptcy details were ever announced in Costa Rica. As was stated in my last article, Vantis has suggested that its records indicate that $16 million is owed to bettors, but the source disputes that figure, claiming the amount that the amount is a bit inflated. In its statement Vantis wrote the following:
"Although the liabilities figure includes betters/players/customers balances of $6.8million, we now know that these players are owed over $15.8million (as per the company's database)"
The source seems to feel that the database figure is likely a bit inflated since chargebacks weren't included. The figure owed is probably closer to $13 million. Asked why he/she felt it was important to come forward with this information, the source was blunt. "A lot of innocent people were hurt by the gross incompetence and fraudulence of these directors," the source answered, "not just bettors but employees of BetonSports as well." Indeed almost 1,100 employees that relied on the company for its livelihood were put out of work and many were stiffed by the company for work they provided. The source also wanted to make it clear that for the most part Gary Kaplan had nothing to do with the failure of the company. It was when Kaplan was forced out at the time of the public offering that things started to go downhill. It should also be noted that BoS never took control of Easybets and the bank accounts and databases were left in place. When the indictments came down, Easybets took back their business but never returned any of the $20 million paid to them.
BetonSports had all the pieces in place to be one of the premiere offshore sportsbooks, but suffered its inevitable fate due to arrogance, gross incompetence and greed. Today two directors are in jail, but others are roaming free with ill gotten cash, while bettors and employees are out their funds. Even if the bettors do get funds back it will be a small portion of what they are owed. Unfortunately, as usual it's the little guy who suffers the most in these situations.
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