Sporting News agrees to $7.2 million settlement over gambling ads

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, officials said Friday.

The advertising ran from the spring of 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 Thursday. 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 Sporting News "places a priority on its responsibilities under the law and its commitments to its customers," chief executive officer 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 while there are too many people who gamble online to go after individuals, his office and the U.S. attorney's office here are going after those involved in conducting and promoting Internet gambling.

Sporting News not alone

Hanaway said the settlement is among several out of her office since 2000 involving Internet and offshore gambling, settlements that have generated more than $40 million. In January 2000, Paradise Casino agreed to forfeit $14 million. In 2003, PayPal Inc., an online payment network, forfeited $10 million to settle allegations it aided in illegal online gambling. In 2004, the Discovery Channel forfeited $6 million for accepting money for ads for Internet gambling companies PartyPoker.com and ParadisePoker.com. Also in 2004, St. Louis sports radio stations KFNS-AM, KFNS-FM and KFRT-AM paid $158,000 to settle allegations that they promoted illegal online gambling.

Hanaway wouldn't say if other sports magazines, radio programs or networks, or Web sites were also under investigation. She said ads in legitimate publications make users believe online wagering is OK.

It isn't.

"When you place a bet online, you're engaging in illegal activity," Hanaway said.