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Internet sports betting in turmoil
Message was posted: 10:24 Jul 19th, 2006

User: 4Flush Rank: Casino Gold: 4490CG Contributor rating: 10400 Status: Offline

Gambling news from http://www.telegraph.co.uk/ The future of sports betting on the internet was thrown into doubt after the full details of the charges levelled against the chief executive and former executives at BetonSports became clear. David Carruthers, the British chief executive, Gary Kaplan, the founder, and nine other former executives of the online betting company have been charged with racketeering conspiracy, transmission of wagers, mail fraud, tax evasion, aiding and abetting and other charges in a 22-count indictment. The details sent the controversial sector into a further tail-spin, with shares falling in heavy volumes. The Department of Justice made it clear that its investigation was solely based on these individuals. However, a DOJ spokesman in Washington, Brian Sierra, warned: "We don't comment on potential targets. We view internet gambling to be in violation of federal laws. Those that conduct this business do so at their own risk." Analysts immediately speculated that these arrests and the seriousness of the charges would give succour to US politicians attempting to pass anti-gambling legislation later this year. Nigel Parsons, analyst at Williams de Broe, said: "The market certainly doesn't think it is company specific." Sportingbet, the company's main rival, which also specialises in US sports betting, saw its shares fall 35pc on top of Monday's fall of 13pc. BetonSports' shares were suspended and are likely to remain so for some time. The DOJ has sought to suspend all the activity of the company in the US by filing a civil complaint. It also wants the company to return the money held in wagering accounts. Such a move could have a devastating effect because more than two-thirds of its $1.77bn (£970m) annual revenues are generated from betting on US sports, particularly baseball and basketball. Some in the City were confident that the prosecution against the BetonSports individuals would fail in the same way that so many anti-online gambling Bills had failed in the Senate. Stephen Whittaker of New Star, which is BetonSports' second largest shareholder with over 8pc of the shares, said: "Long-term online gambling is a growth area. Only 3pc of all bets are place online. This will inevitably grow." He added that following the share price dives, he had added to his holdings in both Partygaming and Sportingbet. Mr Carruthers, who was arrested at Dallas airport on Sunday night, will stay at the Seagoville Federal Correction Institute in Texas until he attends a bail hearing on Friday in Fort Worth.