The US has begun 2023 by cracking down on illegal gambling operators, as federal prosecutors have charged 11 people with conducting illegal online sports betting activities.
According to the Associated Press, the Department of Justice said that the defendants ran an illegal sports betting operation, Red44, via an online offshore server in Costa Rica.
Being investigated by the IRS and Homeland Security, the operation allegedly began 17 years ago in Alabama, a state which has yet to legalize sports betting.
A 114-count indictment filed in Birmingham, Alabama states that the charges include tax evasion, conspiring to operate an illegal sports-betting organization, and money laundering.
It also alleges that Red44 took hundreds of millions of dollars in bets but failed to pay millions in excise taxes. Between 2019 and 2021, prosecutors estimated the operator made $75m, failing to pay nearly $20m in excise taxes.
According to the AP report, the 11 defendants are alleged to be either Red44 original founding members or senior agents. Six of the defendants live in Alabama, while the others are from Colorado, Georgia, Massachusetts, Nevada, and Tennessee.
Prosecutors noted that Red44 had operational similarities to a multilevel marketing business, where a percentage of subagents’ profits were paid to the bookmakers.
Throughout 2022, the American Gaming Association called for tougher action against the illegal gambling industry, calling for all parts of regulated gaming to “work together” against unregulated operators.