On Tuesday, a bookmaker from California admitted guilt to money laundering, operating an unlawful sports betting business, and evading taxes, and consented to pay $14 million in penalties to the federal authorities. 

Christopher Scott King, who lives in Santa Monica, California, unlawfully placed wagers from Los Angeles via a website based in Costa Rica — a strategy frequently used by tech-savvy local bookmakers. The Department of Justice (DOJ) stated that he breached both federal and state regulations, noting that King avoided his responsibilities to the IRS.

"Between 2019 and 2022, King concealed $13,586,493 of income from the IRS by, among other things, not reporting all of his income on his tax returns,” said the Justice Department. “On his 2022 income tax return, for example, King reported $143,258 in taxable income, but, in reality, he earned more than $5 million in income that year.”

The DOJ stated that King resulted in a total loss to the IRS exceeding $3.8 million. The federal agency did not specify the amount King owes to California, and he is not listed among the Franchise Tax Board’s top 500 delinquents, but the sum is likely significant since California’s highest income tax rate of 13.3% is the highest in the nation. 

Utilized cash to purchase real estate and stocks. 

The Justice Department stated that King laundered his illicit profits by purchasing gold and investing part of the cash into different real estate ventures, noting that some of the unlawful funds were also channeled into his brokerage accounts. 

In accordance with his plea deal, King will pay a personal forfeiture judgment of $10 million at his sentencing on September 9. In addition to the over $3.8 million owed to the IRS, his total debts to the federal government now approach nearly $14 million. Concerning his impending sentencing, King may encounter significant prison time. 

He “faces a maximum penalty of five years in prison for each count of tax evasion, operating an illegal gambling operation, and accepting a financial instrument for unlawful internet gambling, and 10 years in prison for money laundering. He also faces a period of supervised release, restitution, and monetary penalties,” according to DOJ.

If the state decides to file charges against King, and he is convicted of avoiding income tax payments, he could be sentenced to as much as three years in prison if found guilty of felony offenses under section 19706 of the state's Revenue and Taxation Code. 

King Probably Had an Attentive Crowd 

Based on the figures provided by the Justice Department, it is evident that King’s bookmaking venture was strong, which is logical as he was based in the biggest city (the second-largest in the US) within the most populated state. 

Illegal bookmakers, whether online or local, have a ready clientele in California since sports betting is not allowed in the state. A 2022 ballot measure endorsed by the commercial gaming sector was decisively rejected after the state's tribal casino leaders backed an opposing proposal to guarantee its failure. 

The tribes that dominate the gaming scene in California have demonstrated minimal interest in revisiting the sports betting topic, and the soonest it may be brought to voters is next year; however, the tribes are adopting a practical, wait-and-see strategy.