Federal authorities issued a press release late last month announcing the resolution of a series of cases stemming from what the feds dubbed “an illegal gambling operation that involved current and former professional athletes, some of whom assisted with the business and others who placed large bets on games.”
The announcement notes that the conspirators were involved in a multimillion dollar scheme that saw US residents including three former Major League Baseball players serve as agents for a Costa Rica-based sportsbook.
While this does not appear to be one of the larger illegal gambling busts in recent memory, the connection to professional athletes, an MLB coach, and a baseball commentator ,among others, make the cases worthy of examination.
Who are the cast of actors?
As LSR reported the morning after the Department of Justice press release, five co-conspirators and an LLC were listed as part of the operation. The defendants range in age from 45-63 years old.
Wayne Nix, a former minor league baseball player, and Edon Kagasoff pleaded guilty to operating an illegal gambling business. The arrangement purportedly began in 2014, with the two-California residents funneling bettors to Sand Island Sports, a Costa Rica-based sportsbook. All defendants have agreed to forfeit significant amounts of money to the Internal Revenue Service for back taxes and penalties as part of their plea deals.
The LLC charged appears to have been allegedly operating as a cleaning service for criminal enterprises, with the press release reporting that customers were encouraged to bring large checks, with the promise that the checks over $10,000 would not be subjected to currency transaction reports, as is required by federal law.
More than meets the eye?
While the Department of Justice press release links five men to the case and one business, the bookie case actually appears larger once one digs into some of the case documents.
In fact, in Joseph Catelao‘s Case Summary sheet, we can see that Assistant US Attorney Jeff Mitchell links the Castelao case to two others
- United States v. Arsenian, which is listed in the press release
- United States v. Funke, which is not listed
As of now, there are no further details.
What went down in MLB bookie ring?
Between 2014 and February 7, 2020, Nix acknowledges as part of his guilty plea that he conspired with two or more other people to operate an illegal gambling business in violation of federal law. The Illegal Gambling Business Act requires violation of a predicate state law, which in this case was operating a sports gambling business. Nix also admitted to filing false tax returns.
In the period between 2014 and 2020, Nix and Kagasoff, as well as others, ran an illegal bookie operation in Los Angeles and Orange County. Nix reportedly solicited customers and ran a group of agents who would then send bets to Sand Island Sports. Nix or his agents would purportedly set up customer accounts at Sand Island Sports and set their betting limits before directing them to the website to place wagers.
When bettors won, Nix or his agents paid them. When bettors lost, Nix or his agents collected the money owed.
The Los Angeles and Orange County areas are obviously densely populated regions. However, Nix’s bookie operation had a penchant for drawing in some famous clients. Included in the list are:
- A professional football player wrote a check for $245,000.00 to Nix on January 7, 2016.
- An MLB coach who paid Nix $4,000 on May 31, 2016.
- A former professional football player was recruited to be an agent.
- A baseball analyst wired Nix $8,000 on December 11, 2018.
- A sports broadcaster told Nix he was going to refinance his house to cover his gambling debts on February 23, 2019.
- A professional baseball player, who owed debts to Nix had his betting limits increased on September 14, 2019.
Not just regulated shops using ban hammer
According to the plea agreement, Nix ran a tight ship and instructed one agent to drop bettors who bet props.
However, Nix did not limit everyone. According to the government documents, on February 3, 2019, Nix accepted a $5 million wager on the Super Bowl.
Bookie facing hard time?
Nix’s plea agreement notes that he faces a maximum of eight years in prison, with three years of supervised release. Nix also faces exposure to various financial penalties. However, Nix is unlikely to receive anywhere near the eight years at the top maximum range.
The Illegal Gambling Business Act charge is assigned a level 12 according to the Federal Sentencing Guidelines (a scale of 1-43.) A level 12 offense for a defendant with no criminal history would see a baseline sentence range of 10-16 months.
The tax offense is a level 20 offense with a +2 upward modification for failing to promptly correct the false filings. A level 22 offense comes with a guideline sentence of between 41 and 51 months for a first-time offender.
How it could be reduced
However, the government has agreed to a two-level reduction if Nix fulfills his obligations, and to make a motion for an additional level on the more serious tax charge. This could see a sentencing range of 6-12 months for the gambling offense and a range of 30-37 months for the tax offense.
Kagasoff and Castelao, who face only illegal gambling business charges ,received a similar plea deal with a two-level reduction for cooperation. There is also the possibility of a sentence outside of the guidelines based on a variety of factors.
What to make of MLB bookie case
It is difficult to figure out just how much of an impact this case will have. It is certainly not one of the larger gambling busts in history, though the cast of clients makes it one of the more salacious.
Increased enforcement of illegal gambling operations will likely be one of the keys to the regulated market thriving. However, it is not clear if this bust is any more significant than a drop of rain in the ocean.