The Collaborative International Dictionary of English v.0.48:

Sponging \Spon"ging\ (-j[i^]ng),
   a. & n. from Sponge, v.
   [1913 Webster]

   Sponging house (Eng. Law), a bailiff's or other house in
      which debtors are put before being taken to jail, or until
      they compromise with their creditors. At these houses
      extortionate charges are commonly made for food, lodging,
      etc.
      [1913 Webster]