Feds Bust Internet Gambling Ring

A Costa Rican operation used U.S. bookmakers to recruit bettors.

The government continued its crackdown on Internet gambling Jan. 7 with the indictments of 12 people for operating a Costa Rica-based wagering Web site and telephone call center that catered to sports bookmakers in the United States.

According to the indictments, Carmen "Buddy" Cicalese operated what is known as a wireroom in Costa Rica that charged U.S. bookmakers weekly fees of $15 to $30 for each gambler the bookies registered with the wireroom. In return, registered gamblers were able to place bets on sporting events at odds set by the Cicalese wireroom.

The gamblers placed the bets through a toll-free number and Web sites operated by Cicalese, including datawager.com and betwestsports.com. The Cicalese operation hoped to evade U.S. law by not taking an interest in the outcome of the wagers. Paying winners and losers was the responsibility of the U.S. bookies.

In turn, the bookies typically paid the Cicalese U.S. operatives by using couriers, debit cards and electronic funds transfers.

The indictments allege the Cicalese wireroom serviced several hundred U.S. bookies, each of whom had registered numerous gambling customers, and received millions of dollars in wagers.

All 12 defendants were charged with gambling and conspiracy to engage in gambling. Carmen and Patrick Cicalese, along with Julius Migdal, were also charged with conspiracy to commit money laundering.

Federal authorities arrested eight of the individuals named in the indictments. Carmen Cicalese remains at large.

Under U.S. law, it is illegal for citizens to use the Internet to place a wager except for state-sanctioned horse racing and lottery sites. In December, the United States reached an agreement with the European Union, Japan and Canada to keep the U.S. Internet gambling market closed to foreign companies.

The agreement followed a World Trade Organization ruling that the United States was violating trade agreements by closing the U.S. gambling market while still sanctioning U.S. online wagering through state sites. The United States responded by offering more generous trade concessions in other areas.