CEO of BetOnSports, the largest online gambling site, pleads guilty

David Carruthers, 51, a top executive of one of the world's largest online gambling companies, BetOnSports, admitted on Wednesday in federal court that he helped run a criminal enterprise that cost more than 250 customers $16 million when it closed. This deal could cost him 33 months in jail, or less, on a charge that carries a penalty of up to 20 years.

Prosecutors agreed to drop seven other charges in the deal. He may be ordered to pay back victims. Catherine Hanaway, U.S. Attorney, described the development as "really big", saying that the case had a "very chilling effect" on illegal online gambling.

Carruthers, BetOnSports founder Gary Kaplan and some of their associates were indicted in St. Louis in 2006 on federal racketeering, conspiracy, fraud and gambling charges. Carruthers was released from prison after posting $1 million bond and agreeing to electronic monitoring. He will remain free pending trial of the others and his eventual sentencing. The company pleaded guilty in May 2007 and also agreed to cooperate with investigators.

Carruthers admitted that BetOnSports told customers it was "legal and licensed, but told investors there was a risk of U.S. criminal charges. He also told that the enterprise "furtively or covertly" used third parties to disguise the money being collected and paid to gamblers. It was also acknowledged that BetOnSports violated the laws of Missouri, Illinois and four other states, and committed mail fraud in its advertising and wire fraud in its transactions. Carruthers also said that claiming the safety of money the company lied.