LV company agrees to fine, will sell Internet gambling subsidiary

Thursday, July 13, 2000 | 10:47 a.m.

CARSON CITY -- In the first disciplinary case ever in Nevada for Internet gambling violations, a Las Vegas company agreed to pay a $10,000 fine and to sell off its Australian business that allegedly accepted illegal sports bets.

American Wagering Inc. and the state Gaming Control Board Wednesday signed a stipulation to settle the complaint that was filed against the company last December.

Deputy Attorney General Derek Harmer said the case took extended time to settle because this was the first one in Nevada. State regulations prohibit betting by fax, telephone or the Internet.

American Wagering, whose president is Victor Salerno, must pay the fine to the Nevada Gaming Commission when it meets later this month. The company also agreed to sell off Megasports Australia in 180 days. And during this interim period, American Wagering must keep close tabs on Megasports to make sure there are no other illegal bets made from the United States.

Megasports is licensed in Australia to accept Internet bets.

The Control Board has been taking a closer look at Nevada gaming companies that may have ties to the Internet gambling industry. Regulators are worried that the state's reputation may suffer if federal action is taken against an illegal betting operation that has ties to a Nevada company.

The complaint against AWI said a Control Board agent in Las Vegas, using the bogus name of James Lawrence, used the Internet to open a $100 wagering account with Megasports. The money was deducted from the credit card account of Lawrence. Between July 23 and Aug. 4, 1999, Lawrence placed 12 bets on major league baseball teams. In he end, he had $114.

Lawrence tried to cash out and an employee of Megasports told him that money could be sent anywhere in the world. The employee also allegedly said that bets could not be made from within the United States.

A day later, Megasports locked up the Lawrence account. And Salerno sent a letter to Lawrence saying Megasports rescinded all wagers placed through the Internet and asked how he wanted his original $100 returned.

AWI did not admit nor deny the allegations in the complaint but agreed to settle the case without contesting the allegations. The board said there was no evidence the violations were the result of "any willful act or omission by AWI or its directors, officers or employees."

AWI will have 180 days to divest itself of the Australian subsidiary from the date of paying the fine. If it needs additional time to sell, it must get permission from the board or commission.

If AWI doesn't make the deadline and doesn't get an extension, the Australian company must stop taking wagers and freeze all accounts within 24 hours pending a hearing before the gaming commission.

The commission will have the option to shut down all operations of Megasports within 72 hours if it determines AWI has failed to act in good faith in trying to sell the subsidiary. The commission could also require Megasports to pay back all money owed on its wagering accounts within 30 days. AWI could also face further disciplinary action in Nevada.

The board, in the stipulation, said AWI "has taken aggressive and prompt remedial measures to prevent" future violations of the regulations.

But between now and the sale of the subsidiary, AWI must submit bi-monthly reports "related to the initial blocked Internet access to the Megasports Australia site."

There must be periodic audits to make sure the employees of the Australia company are complying with the conditions. AWI must notify the board of any active Megasports account that originated in the United States. Those account must be closed and the wagers rescinded. AWI must continue to work with Internet consultants to develop better technology to target Internet access origins.

AWI said this settlement "is not the product of force, threats nor is influenced by any form of duress or coercion ..."