US Officials Cracking Down on Offshore Betting Sites

When the U.S. House of Representatives overwhelmingly passed a bill cracking down on Internet gambling last week, David Carruthers, CEO of online gaming company Bet On Sports, was one of the most outspoken critics of the proposed law. The 49-year-old British executive has more immediate problems to worry about. Federal agents arrested Carruthers on Sunday at Dallas-Fort Worth International Airport as he made his way from the company's offices in London to Costa Rica.

As part of a wide-ranging probe of what the American Gaming Association says is a $12 billion online gambling industry, U.S. Attorney Catherine Hanaway unsealed a 22-count indictment charging racketeering, conspiracy and fraud against Carruthers, 10 others and four companies Monday. A warrant was sworn out for the arrest of 47-year-old company founder Gary Kaplan. U.S. District Judge Catherine Perry also approved the government's request to bar Bet On Sports from accepting bets from this country and forcing it to refund money to U.S. account holders. The FBI has ordered four phone companies to shut off service to the company.

The arrest of Carruthers, a longtime British racing industry executive who joined Bet On Sports in 2000, is setting off alarm bells in Europe and the Caribbean, where the offshore casino industry is based. Bet On Sports asked for its stock to be suspended on the London Stock Exchange on Tuesday. Shares of British gaming stocks, such as industry leader Party Gaming, fell Tuesday in heavy trading, wiping out more than $1 billion in value.

"The No. 1 topic at every board meeting today is "Am I next?" says Internet gambling attorney Lawrence Walters. "There's a high degree of concern now that the government has made it clear they think they can prosecute foreign citizens at foreign corporations."

Despite generating half or more of their revenue from U.S. customers, online gaming companies maintain U.S. laws don't apply to them because they're located in places where online gaming is legal, such as England, Costa Rica and Gibraltar.

U.S. Attorney Hanaway promised the indictments are "but one step in a series of actions designed to punish and seize the profits of individuals who disregard federal and state laws" during a news conference Monday. That means top casino executives will have to worry about personal exposure if they try to catch a connecting flight in the USA, as did Carruthers, says Walters.

The Unlawful Internet Gambling Act passed by the House on July 11 would strengthen the 1961 law by barring banks and credit card companies from collecting for Internet casinos. The bill's main supporter in the Senate, Jon Kyl, R-Ariz., issued a statement Tuesday saying the indictment strengthens the need for legislation to ban Internet gambling.

July 19, 2006
Posted By Bob Hartman
Staff Editor, CasinoGamblingWeb.com    Previous Page | Internet Gambling | Top Online Casinos | Submit News!

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