Stephen Lawrence, whose company was once one of the primary ways U.S. citizens placed bets with offshore bookies, acknowledged in a federal courtroom in Manhattan that the operation was illegal.
"I came to understand that providing payment services to online gambling Web sites serving customers in the United States was wrong," he told the judge.
His lawyers said he was cooperating with U.S. investigators, and had also agreed to be at least partly responsible for the $100 million the government is seeking from people who were involved in the operation.
Lawrence and another Neteller PLC director, John David Lefebvre, were arrested in January as part of a U.S. crackdown on the online gambling industry.
Both men are Canadian citizens. Their company was based in the Isle of Man and traded on the London Stock Exchange. Some experts had initially believed that the company's offshore status might put it beyond the reach of U.S. law.
Neteller also was not directly involved in either placing or taking bets. It essentially served as a financial middleman, through which bettors could send and receive cash from Internet bookies.
Industry experts estimate that Americans bet $6 billion a year online.
Founded in 1999, Neteller grew fast as spooked credit card companies, worried about legal liability, stopped doing business with offshore gambling operations.
Prosecutors said Neteller processed $5.1 billion worth of transactions — nearly all involving online gambling — in the first half of 2006. A majority of the revenue came from customers in the U.S.
The FBI began looking at Neteller's operations in June 2006. Lawrence, at one point, was the company's largest shareholder.
The company announced within days of the arrests of Lefebvre and Lawrence that it would no longer process online gambling transactions for U.S. customers. Both men have left the company's board of directors.
Lefebvre pleaded not guilty. His case is still pending.