BetOnSports said it plans to stop operating in Costa Rica and Antigua — from where it accepted wagers from tens of thousands of customers in the United States — as soon as possible following a U.S. federal court order for the company to stop taking bets from the country.
The company said the decision would allow it to gain more sales from outside the United States, in Europe and Asia, to help it pay creditors.
However, Wayne Brown, an analyst at Altium said the decision was the "worst case scenario" that effectively spelled the end of the company, which currently generates almost three-quarters of its business in the United States.
The company took in wagers of $735 million and had 50,000 active players in the first quarter of this year.
Brown said an attempt to focus on the company's Asian operations was unlikely to succeed.
"Asia provides around 5 percent of profits and is very small in the scheme of things," he said.
Internet betting is illegal throughout the United States and authorities there have targeted BetOnSports in a clampdown.
But, in an April interview with CBS News correspondent Anthony Mason, the company's then-chief executive David Carruthers said BetOnSports was not breaking the law.
"If I was doing this in the United States, it would be illegal," Carruthers told Mason. "But I'm not. I'm doing it here in Costa Rica."
Last month, Carruthers was arrested at a Texas airport and a 22-count indictment was unveiled in St. Louis, Mo., alleging fraud and racketeering against the company. The federal court also ordered the company to stop taking U.S. bets and return deposits paid by American bettors.
BetOnSports' shares were suspended on the same day. They were worth around $234 million when they were removed from active trading.
In a statement issued to the London Stock Exchange, the board of directors said Friday that "after thoroughly reviewing possible alternative business plans, they no longer consider the U.S.-facing operations of the company ... to be viable."
The company also pledged to refund the deposits of its U.S.-based customers, many of whom have uncollected winnings that must be transferred through third-party agencies based outside the United States.
The directors said they wanted to refund all customers' money, but cautioned this would prove difficult and "will depend upon the company's ability to persuade banks and cash processors to release its funds."
Almost all the wagers placed on BetOnSports come from the U.S. For the 53 weeks preceding February 2005, the company's sportsbook had more than 71,000 active customers who placed 9.9 million bets. The average bet was $109. Prosecutors said 97 percent of the sports bets are made on American football, basketball and baseball.