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5Dimes Gives DoJ $46.8M: Regulated Sportsbook on the Way?

Logo of 5Dimes

In a statement dated Wednesday, Sept. 30, the U.S. Department of Justice announced that it has reached an agreement to resolve the ongoing criminal case against offshore online bookmaker 5Dimes. As part of the settlement agreement, assets worth more than $46.8 million will be handed over to the authorities. 5Dimes is a Costa Rica-based online sportsbook, casino, and poker provider that, until very recently, welcomed American users through its virtual doors.

5Dimes + DoJ Reach Agreement

Not Exactly Unexpected

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Though the details were not really publicly known before Wednesday's statement, many had already foreseen 5Dimes making some kind of arrangement with the U.S. federal government. The sportsbook had ceased accepting bets from U.S. customers on Sept. 21, and the explanation given was that “we need to temporarily suspend our service of the U.S. market so that we can launch our new operations with a fresh start.”

This wording strongly implied that the company was seeking to enter the state-licensed, regulated U.S. gaming market: something that would have been impossible with the cloud of criminal investigations hanging over 5Dimes. Now that the corporation has made its peace with the DoJ, it will be free to pursue legal gambling operations within the United States, subject, of course, to the various statutes and regulatory frameworks established by the several states to regulate this activity.

More About the Settlement

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The alleged criminal activity referenced by the DoJ stems from an investigation launched in 2016 by the U.S. Attorney's Office for the Eastern District of Pennsylvania and the Department of Homeland Security Investigations. They were trying to tie 5Dimes and its founder, William Sean “5Dimes Tony” Creighton, to illegal gambling violations, money laundering, wire fraud, and similar criminal behavior. Just as with the Black Friday indictments nearly a decade prior, the investigations into 5Dimes' business focused on the payment processor angle: miscoded credit card transactions, the use of third-party entities to obfuscate the nature of the payments, and laundering money through purchases of gold coins, rare collectibles, and the like.

William Sean CreightonWilliam Sean “5Dimes Tony” Creighton Founded His Sportsbook Around Two Decades Ago

Founder of 5Dimes no Longer Around

Though William Sean Creighton was the main individual mentioned by government documents in connection with 5Dimes, he was not the one who negotiated the settlement with the DoJ. This is because he was killed in September 2018 during a kidnapping for ransom gone awry.

It was Creighton's widow, Laura Varela, who agreed to the terms stipulated by the U.S. government. She probably got more favorable treatment than Creighton would have because, as noted in the DoJ's statement on the matter, “During Creighton’s lifetime, Varela…was never employed as a manager at 5Dimes, nor did she exercise any control over the operations of 5Dimes.” Furthermore, “Varela subsequently took control of 5Dimes and sought to resolve the federal investigation and change the operations of the company in a manner that complies with U.S. law.”

In a press release issued by 5Dimes, Laura Varela was quoted as saying:

It has been a very difficult two years for me and my family. But today marks a pivotal turning point and a fresh start for me and the 5Dimes brand, as well as a milestone for the legalization of sports gaming in the U.S. My husband's death was tragic, but he loved 5Dimes and all of its loyal customers. Now his spirit will be able to live on as the 5Dimes brand begins this new chapter. Along with a team of trusted advisors, I am exploring how we might relaunch 5Dimes as a legal sportsbook and casino in the legal, regulated U.S. market to continue serving our many loyal customers.

Laura VarelaLaura Varela, Current Owner of 5Dimes and Widow of Founder Sean Creighton

$46.8 Million Forfeit

The assets to be handed over to the Department of Justice by 5Dimes and Varela are worth $46,817,880.60. This figure includes:

  • A 1948 George Mikan rookie basketball card seized during the 2016 investigation
  • A 1970 Pete Maravich rookie basketball card seized during the 2016 investigation
  • More than $715,000 in rare coins seized during the 2016 investigation
  • An undisclosed amount of cash seized during the 2016 investigation
  • $2 million seized by Costa Rican law enforcement
  • $26 million in additional assets yet to be collected by the government
  • $15 million in further proceeds of “criminal conduct”

In exchange for this financial windfall, the U.S. Attorney's Office for the Eastern District of Pennsylvania pledges to “not criminally prosecute 5Dimes or Varela for any crimes committed prior to September 30, 2020 (except for criminal tax violations, if any, as to which EDPA does not make any agreement), and will not file a civil action relating to the conduct described in the settlement agreement.”

Regulated U.S. Sports Betting

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Unlike internet poker and casino gaming, which have only been approved by a handful of states, there has been a surge in legalized sports betting in the United States. Eighteen states and the District of Columbia now have regulated sportsbooks, and another four states have passed the needed legislation and expect their first instate bookmakers to appear shortly. Most industry observers believe that more than half the states will eventually allow licensed sports betting within their borders.

U.S. Supreme Court Justices c. 2018Justices of the Supreme Court at the Time of Murphy v. NCAA Decision

This development was preceded by the landmark Supreme Court decision in Murphy v. NCAA. The court held that the Professional and Amateur Sports Protection Act of 1992, which prevented states from expanding sports betting, was unconstitutional. This Supreme Court decision means that states can now dabble in sports wagering licensure if they want to.

5Dimes Preparing for U.S. Launch

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5Dimes has already gone ahead and started 5D Americas, a Delaware-registered corporation. This indicates that it's serious about jumping into the U.S. regulated market any day now. Indeed, in an article in The Wall Street Journal, Jeff Ifrah, one of Varela's lawyers, said that the company intends to make a splash in New Jersey first by applying for a license in the Garden State.

Potential Obstacles Lie in Wait

Though 5Dimes appears to be making genuine progress in cleaning up its legal act, this may not be enough to placate state officials. In the past, they have looked askance at firms that have accepted online wagers from Americans even if those companies had stopped doing so by the time they applied for licensure.

Just look at the travails PokerStars had to endure as it sought a New Jersey license to offer gaming products within the state. It initially submitted its application in April 2013, but approval was delayed as the New Jersey Division of Gaming Enforcement conducted seemingly interminable investigations into the corporation, interviews with dozens of individuals, and talks with regulatory bodies in other gaming jurisdictions. Finally, in September 2015, about two and a half years after the paperwork was first filed, the DGE approved PokerStars for a license, and its online cardroom began operations in March 2016.

PokerStars still has not obtained a license in Nevada. The presence of “bad actor” language in the NV regulations is blamed by many for this failure.

PokerStars encountered these difficulties despite clearing its name in the settlement it reached with the Department of Justice in 2012. In fact, in 2014, PokerStars entered an agreement to be purchased by Amaya Gaming, which saw its old ownership and management structure overhauled with new faces occupying key roles. This did not deter bureaucrats from still harboring doubts about the company.

5Dimes' Unlikely Ally?

As it tries to woo decision-makers within various states, 5Dimes might find some assistance from an unexpected source. The federal government looks like it's very bullish on 5Dimes' prospects now that the DoJ has ended its prosecution of the gambling concern.

According to the press release from 5Dimes:

The agreement [with the DoJ] expressly clarifies there are no legal restrictions on Ms. Varela's use of her assets or the assets of the 5Dimes brand to explore future options, including, but not limited to, re-constituting the 5Dimes brand to be licensed to conduct legal, regulated gaming activities in the U.S. and internationally.

Maria M. Carrillo, assistant U.S. Attorney for the Eastern District of Pennsylvania told ESPN:

[Varela] is not operating in violation of U.S. law, and she is not actively taking bets from U.S. bettors. Whether she's positioned well for regulators, that's up for the regulators to decide. [5Dimes] certainly is no longer in violation of federal law.

The article from ESPN also contains the following cryptic statement: “As part of the settlement, the U.S. Attorney's Office for the Eastern District of Pennsylvania said, at Varela's request, it will answer questions from interested parties, including state regulatory authorities, regarding 5Dimes and Varela.”

The federal authorities appear to be doing everything in their power, short of granting their explicit stamp of approval, to go to bat for 5Dimes as it pursues its business interests in the United States and elsewhere. This is no doubt a positive development for offshore betting enterprises looking to go the licensed route although it does raise the specter of prosecutors giving their personal thumbs-up or -down to specific companies, just like in days of old when Caesars would determine the fates of vanquished gladiators according to their mutable, individual whims.

5Dimes Having Its Cake and Eating It Too?

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Even with the unusually favorable resolution of its case with the DoJ, there are signs that 5Dimes is not completely satisfied with what was laid out in the settlement agreement. The firm did stop serving U.S. customers, like it promised, and American visitors to its website now see the following:

5Dimes Access Denied

However, there are a number of sites that are clones of 5Dimes, including BetAnySports.com, which are still permitting users from the United States of America to open up accounts and place wagers. It's highly likely that these entities are being run by people outside the 5Dimes organization, but their similarity to the main 5Dimes website hints at a continuing connection between these businesses.

BetAnySports WebsiteBetAnySports.com Offers the Same Betting Odds and Gambling Products as 5Dimes

Offshore Betting Still Possible

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If you're a former 5Dimes customer from the United States, then there's no need to wait until it gains regulatory approval to transact in your state (which might never happen). There are any number of other offshore bookies that continue to accept U.S. bettors. Find out more about them by reading up on the top sportsbooks for Americans.

If casino games, like roulette and blackjack, appeal to you more, then head over to a list of trustworthy USA internet casinos. Poker enthusiasts can instead check out a thorough guide to playing cards online from the United States.