BOS had longstanding relationships with mainstream publications and sports media outlets in every major city. BOS had celebrity endorsers. BOS had grown to a couple of thousand employees. BOS shareholders ranged from Fidelity Investments, Goldman Sachs, and Morgan Stanley in the United States to Lord and Lady Glentoran in the UK. BOS was now managed by professional senior managers from the respected British bookmaking industry.

BetOnSports benefited from all of this. Yet it was that very respectability that opened them up to prosecution from the US government, as the legal case brought by the US Department of Justice was loaded with data culled directly from company reports surrounding their public offering and continuing operations. And the “respectable” board members looked strictly to their own interests instead of fighting an action of a government that most consider to have had no jurisdiction in the matter.

It is truly difficult to find a legal analyst who thinks that the US had a legal leg to stand on in their effort to shut down a company listed on the London Stock Exchange, licensed to operate in several countries, with primary operations in Costa Rica. The Costa Rican government refused to assist the US in extradition. The business press in London has been braying over the overreach of the US going after a company with no offices or employees stateside. American telecommunications companies laughed at the government’s request that they shut down the company’s 800 numbers from the US.

Despite having no offices in the US, no employees in the US, and no wagering taking place in the US, the US Department of Justice was able to bring BetOnSports down. When the United States government indicted the British CEO of the company as he changed planes in the United States, the directors of this public company had one overriding concern, to not get caught up in the legal proceedings themselves.

It was that very structure, the seasoned managers from Ladbrokes, the respectable British businessmen on the board, and Lord Glentoran himself as a non-managing director who had lauded the company on the floor of the House of Lords in London, that brought the company down. The public nature of the firm attracted the prosecution, and their status as a public company introduced management who were not committed to the future of the firm.

A few years ago there were people at BetOnSports for whom the company was their life’s work and the source of their wealth. It was their baby. They had controversial backgrounds and would never have been asked to join anyone’s supper club. But they saw a need, took a risk, filled the need, and made it work. After BetOnSports went public that all changed. The founders and longtime execs no longer had any sort of management role. Tenured managers were let go. The people that cared were gone. The company was now just the corporate vehicle-of-the-moment for the new suits to make a pretty penny.

Searching various corporate information resources for data on the board members of BetOnSports is instructive. Under “key people” board members Clive Parritt, the company’s chairman and Richard Creed, the finance director, are listed frequently. According to their bios, before joining BetOnSports in 2004 (Parritt) and 2005 (Creed) neither man had ever spent a day working in the gaming industry. And when faced with their current challenge their commitment to the best interests of the company proved to be less than their commitment to making their own lives easier via the path of least resistance.

Rather than show any backbone and continue to operate, as numerous other offshore sports books did when the Clinton Administration’s Department of Justice took similar actions back in the late 1990’s, the directors of BetOnSports elected to comply with the DOJ’s efforts to shut them down, voluntarily ceasing operations and eventually agreeing to no longer service American customers. The Board of Directors caved because they had no real vested interest in the company. With the heat on in the online gaming sector, the grass was suddenly greener back in their old industries of finance and accounting. They’d rather switch than fight. As a result, 2,000 Costa Ricans are out of work while 100,000 Americans wonder if they’ll get their money back.

If BetOnSports wasn’t so respectable, if it didn’t have a board of directors with well-fed posteriors to cover, if it didn’t have a stock listing, it would unquestionably still be around. If it was the old BetOnSports, Gary Kaplan, the founder and former CEO with the dubious background, would have told the US DOJ to take a flying leap. He would have protected his life’s work, and like all the companies who ignored the indictments back in 1998, BetOnSports would still be in business. After all, Costa Rica was not about to allow the US to shut down major employers based on a liberal interpretation of archaic laws. The UK was not about to start cooperating with a US crackdown on British citizens in an industry that is mainstream and respectable in the United Kingdom.

The correct response was clearly, “We’re a publicly held British conglomerate that processes wagers in San Jose, Costa Rica. You, the United States government, have no jurisdiction over us. We are ignoring your order and carrying on business as usual. Cheerio!”

But His Lordship, Clive Parrit, Richard Creed, and the other Brits making the decisions for the new BOS chose not to fight a fight that most legal analysts were supremely confident they would win.

Why bother? Why handle the mess? Why postpone the vacation to New York? Why not talk to that fellow down at the club who says his insurance firm needs a new director? Why not explore that CFO position with the financial company? Why fight the US government when the grass is greener elsewhere?

The offshore gambling industry is not going anywhere, but in the current climate the place to be is with the closely-held private firm with management that actually cares about the future of the company. Individual owners will fight for their company. Longtime employees will fight for what they’ve built over the past five or ten years.

BetOnSports didn’t even have to fight. They just had to resist a little bit. Instead they caved. They just gave up. The Brits acted like Frenchmen. And now a quarter of a billion dollars of investor wealth has evaporated, a couple of thousand Costa Ricans are unemployed, and 100,000 Americans are hoping they get their money back in the next couple of months.

Editor’s Note: For more background on this story visit http://www.consumerbet.com/sgn_old/6_21_06.html

About the Author: Kevin O’Neill is an author, analyst, and champion sports handicapper. For a complimentary copy of Kevin’s Maximum Profit Football Annual 2006 the most opinionated football publication visit www.FootballAnnual.com. You’ll receive an additional free bonus as well when you claim your free copy of the Maximum Profit Football Annual 2006 at www.FootballAnnual.com