The boss of the online betting group BetonSports was detained at an airport early on Monday morning by the FBI after he touched down in the United States on his way from Britain to the company’s main operational base in Costa Rica.
Investor fears that the move marked the start of a broader crackdown on internet gambling, judged to be illegal by the US justice department, sent shares in several online operators plunging.
BetonSports fell 23p, or 16%, to 122,5p and Sportingbet lost 42,25p to 282p. PartyGaming, which does not take sports bets, was down 13p to 96p in early trading, but recovered to end the day down 6p at 103p. These are among several offshore companies to have floated in London in recent years that make a lot of their revenues from American gamblers — though they operate from bases outside the US.
A BetonSports spokesperson said the firm’s chief executive, David Carruthers (48) was detained, along with his wife Carol, at a US airport at 11pm local time by the federal authorities. Mrs Carruthers has since flown home to Britain. On Monday night the spokesperson said BetonSports had still not heard from Carruthers.
He is being held in custody in Fort Worth, Texas, after a federal grand jury in the Eastern District of Missouri returned a 22-count indictment charging him and 10 other individuals and four corporations on various charges of racketeering, conspiracy and fraud, the US justice department said in a statement.
The founder of BetonSports, Gary Kaplan (47) was also charged with 20 felony violations of federal laws, it said. A warrant has been issued for his arrest.
The US has also filed a civil complaint to obtain an order requiring BetonSports to stop taking sports bets from the country and to return money held in wagering accounts to account holders in the US.
A judge issued a temporary restraining order on Monday , with a hearing in the civil case requested within 10 days.
”Illegal commercial gambling across state and international borders is a crime,” US attorney Catherine Hanaway of the Eastern District of Missouri said. ”This indictment is but one step in a series of actions designed to punish and seize the profits of individuals who disregard federal and state laws.”
The justice department has repeatedly said it regards online betting — including sports betting and gaming — as an illegal activity under the Wire Act, the wording of which prohibits wagers on ”sporting events or contests”.
Many businesses, particularly online gaming operators, take issue with this position and point to a federal appellate court judgement in 2002, known as the Mastercard ruling, which states: ”The Wire Act does not prohibit non-sports internet gambling.”
BetonSports and its much larger rival Sportingbet operate sports betting as well as casino and poker websites targeted at the US market.
On Monday night, asked if Sportingbet directors would continue to travel to the US in the light of Carruthers’ detainment, a spokesperson said: ”We are monitoring the situation closely.”
Chief executive Nigel Payne, who visits the US on a monthly basis, was on holiday on Monday and unavailable for comment. The spokesperson confirmed he was not staying at his Florida home or anywhere in the US.
Payne is due to step down as chief executive in October in order to focus on lobbying activities for the group, particularly in the US. He will remain on the board of Sportingbet, which makes 65% of its revenues from the US.
A Bill designed to tighten US law on online betting was passed by the House of Representatives last week and has been handed to the Senate.
Carruthers is among those who played down the likelihood of the Bill becoming law. Last week he told the company’s annual shareholder meeting its chances were ”remote”. – Guardian Unlimited Â