Feds Continue Fight Against Bookmaking

While it's difficult to determine if their efforts are making much of a dent in illegal bookmaking in the U.S., federal law enforcement officials have been busy the past few years prosecuting these sports wagering operations that typically make use of the Internet.

Racing's added competition from casinos is well documented but some have estimated that the illegal sports wagering market in the U.S. handles $400 billion a year. Bettors in this market could be drawn to racing, and in fact, horse racing wagers typically are part of the illegal sports wagering operations.

National Thoroughbred Racing Association president Alex Waldrop declined to estimate the amount of money being wagered through bookmakers on horse racing but he applauded enforcement efforts to halt illegal bookmaking.

"We don't speculate as to the impact of offshore gaming and wagering sites on pari-mutuel horse racing nor do we have an estimate of how much is being wagered through these illegal sites," Waldrop said. "However, efforts to stop illegal online wagering are good for pari-mutuel horse racing in the U.S. because they strengthen horse racing's unique right to conduct legal, interstate online wagering pursuant to the Interstate Horseracing Act."

Some experts have pointed out that some of the money wagered through bookmakers on horse racing does land in the pari-mutuel pools as bookmakers try to limit their exposure.

A look at recent federal indictments and court cases aganst alleged illegal bookmakers reveals similar organization. Typically a local book-making operation uses an offshore Internet site, or sites, to record wagers on sporting events, including horse racing. The offshore site records the submitted wagers for players who are given an identifying code from the local operators. The local operators then pay out winnings and collect debts based on the event outcomes.

In a New York Times op-ed piece by NBA commissioner Adam Silver calling for the legalization of sports betting, Silver said some estimates have U.S. bettors wagering $400 billion a year through illegal sports wagering outlets. Silver noted the potential for corruption of sports with such a huge illegal market, and sees legalization as a better option.

The federal enforcement efforts to halt these operations in the past three years are numerous and spread throughout the country, targeting large and small bookmakers. 

A few examples: 

• In Philadelphia this month, two members of the multi-million dollar sports betting operation Mastronardo Bookmaking Organization were sentenced to prison terms, with John Vito Mastronardo Jr., of Boca Raton, Fla., receiving nine months and Joseph Mastronardo of Huntingdon Valley, Pa., receiving five months.

The U.S. Attorney for the Eastern District of Pennsylvania reports that of the 16 defendants indicted in the case with conspiring to participate in a racketeering enterprise conducting an illegal gambling business, 15 have pleaded guilty. Charges were dropped against the other defendant, Joanna Mastronardo.

According to federal law enforcement officials, at its peak the Mastronardo Bookmaking Organization had more than 1,000 bettors and was generating millions of dollars a year. Between Jan, 1, 2005, and Jan.1, 2011, the organization used internet websites and telephone numbers that allowed bettors to place sports bets on football, baseball, basketball, golf, horse racing, and other sporting events.  Residents of Costa Rica staffed the internet websites and answered the telephones. 

Law enforcement seized more than $2.1 million of cash that Joseph Vito Mastronardo Jr. hid in and around his home, including in specially-built secret compartments and in PVC pipes that were buried in his backyard.

• Also earlier this month, a federal jury in Oklahoma City convicted three Florida men and a Florida corporation for their participation in an illegal international gambling and money laundering enterprise, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department's Criminal Division and U.S. Attorney Sanford C. Coats of the Western District of Oklahoma.

Paul Francis Tucker, 50, of Mount Dora, Fla., Luis Robles, 50, of St. Pete Beach, Fla., and Zapt Electrical Sales Inc., a corporation registered in Florida and owned by Tucker, were found guilty of engaging in a racketeering conspiracy, conducting an illegal gambling business, and conspiracy to commit money laundering. Christopher Lee Tanner, 58, of Sarasota, Fla., was found guilty of conducting an illegal gambling ring.  

According to evidence presented at trial, from 2003 to 2013, Tanner, Tucker, Robles, and Zapt Electrical Sales conspired with others to operate Internet and telephone gambling services from Panama City, Panama, through an enterprise known as Legendz Sports. The international gambling enterprise took more than $1 billon in illegal wagers, almost exclusively from gamblers in the U.S. on American sporting events. 

"In the age of the Internet, what used to be a crime conducted by bookies on street corners is now an international criminal enterprise," Caldwell said.  "Operating online but offshore, the individuals convicted in this case raked in more than a billion dollars in illegal gambling proceeds. But as these convictions demonstrate, no matter where or how organized criminals operate, the criminal division will bring them to justice."

• In June 2013 the U.S. Attorney in San Diego indicted 18 members of an alleged, "violent gambling ring," known as Macho Sports. Ring participants allegedly took in millions of dollars in illegal sports wagers for a decade in Southern California. The operation allegedly used Internet and toll-free phone numbers based in Peru to accept bets and intimidation, threats, and violence to ensure prompt payments of debts. One of the members allegedly recruited bettors at the Grand Del Mar resort.

• In January this year in U.S. District Court in Lexington, Christopher Swann was sentenced to eight weekends of confinement and five years of probation, a $4,000 fine, $158,033 in restitution, and community service for his involvement in a book-making operation. 

Swann came to the attention of federal authorities, in part, when Joey Mills, a former bank officer at United Bank in Versailles, Ky., admitted to embezzling $983,767 from 2012-14 from the bank. Mills said he had a gambling problem and wagered through Swann.

"I truly feel, regardless of Mr. Mills' activities with me, he would have committed the same offense with some other person or establishment," Swann said at his Jan. 28 sentencing hearing before Judge Danny Reeves in U.S. District Court.

Swann, who had previously been convicted of a gambling-related offense, has ties to the racing industry as president of equine insurance company Abakur Indemnity. On his LinkedIn page, he lists himself as owner and president of Cygnet Farm.