Sporting News settles with U.S. over gambling ads

By The Associated Press

ST. LOUIS — The Sporting News has agreed to a $7.2 million settlement with the U.S. government to resolve claims that it promoted illegal Internet and telephone gambling in print, on its Web site and on its radio stations.

The advertising ran from spring 2000 through December 2003, said Catherine Hanaway, U.S. attorney for eastern Missouri. The Sporting News continued to run the ads for more than six months after the Justice Department sent a letter dated June 11, 2003, to the Magazine Publishers of America, warning that ads promoting Internet gambling and offshore sports betting operations were illegal, Hanaway said.

But in a statement, The Sporting News said it stopped running the ads "after it was first notified of the government's position that it is illegal to do so."

The Sporting News paid a $4.2 million fine on Jan. 19. The remaining $3 million of the settlement will be in the form of public service ads aimed at dissuading people from gambling over the Internet or via telephone.

"Taking the view of illegal wagering as mere 'entertainment' ignores its plain illegality, as well as the significant and well-documented social problems associated with unregulated commercial gambling," Hanaway said.

The settlement recognized The Sporting News' "laudable, cooperative and conciliatory" conduct during the investigation.

The Sporting News "places a priority on its responsibilities under the law and its commitments to its customers," CEO Rick Allen said in the statement. "We are pleased to resolve this matter and look forward to continuing to provide high quality sports content in our print, radio, and online business units."

Some estimate that the offshore gaming business generates more than $1 billion in revenue annually, even though online gambling is illegal in the U.S. FBI Special Agent Roland Covington said that though there were too many people who gamble online to go after individuals, his office and the U.S. Attorney's office here were going after those involved in conducting and promoting Internet gambling.

The gaming companies themselves are difficult to prosecute because they're located in places like the Dominican Republic, Malaysia and Costa Rica, Hanaway said.

Typically in Internet gambling, the customer uses a credit card to open an account with a third party, then bets on sporting events, plays poker or engages in some other form of gambling. Losses and winnings are applied to the credit-card account.

Hanaway said many credit-card companies now prohibit use of the cards in Internet gambling.