A major online gambling conference in Las Vegas has been postponed for fear of further arrests after the BetonSports chief executive, David Carruthers, was seized by FBI agents while changing planes in Dallas.
The decision highlights the extreme nervousness throughout the online gaming industry over the prospect of many other companies and executives being caught in the crackdown by the US government on what it sees as an illegal activity.
The annual event, organised by the internet gambling company bodog.com, will be held outside the US at a later date. Although bodog.com's colourful chief executive, the Canadian Calvin Ayre, had initially insisted the conference would go ahead, the company pulled the plug yesterday.
It said: "In the last few days, many who planned to attend the conference have expressed a high level of concern over the uncertainty surrounding the US government's recent actions against one of the companies in our industry. It is in light of these concerns that we have decided to postpone the Bodog.com marketing conference to a later date and at an international location."
While the internet gaming industry has been at pains to insist that BetonSports is being specifically targeted, many are privately concerned that the action could be the start of a wider US clampdown on the sector and are wary of travelling across the Atlantic until the situation becomes clearer. Mr Carruthers' detention has sent the whole London-listed sector into a tailspin as most of its spectacular growth has come from American customers.
Mr Carruthers, who has been behind bars in Fort Worth, Texas, since his arrest on Sunday night, will appear in court today to ask for bail while awaiting trial for running an illegal betting operation. His lawyer, Tim Evans, said it would be hard to persuade the US authorities to release the 49-year-old on bail. "It's going to be difficult because the government is going to take the position that, since he is a UK citizen and the conduct alleged in the US is not unlawful in the UK, it would be doubtful that he would be able to be extradited from the UK were he to go back," Mr Evans said. But he said he would "vigorously" contest that position, arguing it is a "complicated case that will take months and months" to come to court. Apart from Mr Carruthers, 10 other individuals and four companies have been indicted.
BetonSports was forced to close down its US-facing websites, including the poker sites, costing it more than £4m a day in lost revenues and leaving it with its Asian websites which bring in far less.
BetonSports has said it would fight against the restraining order. But while US customers were being told yesterday that an appeal was being heard and the website could be back up and running by 5pm Eastern Time (10pm UK time), the chairman Clive Parritt denied that was the case.
The company is an easy target for US prosecutors, because of its controversial founder Gary Kaplan and its overt telephone sports betting activities in the US, which are illegal under the 1961 Wire Act. While based in Costa Rica, it has subsidiaries and employees in the US. Other online operators have been careful not to have a physical presence in America and some of the biggest companies, PartyGaming and 888, do not take sports bets and limit themselves to poker and casino, which are not mentioned in the Wire Act.
Mark Blandford, the founder and vice-chairman of Sportingbet, BetonSports' far larger rival, spent last weekend in Las Vegas and returned on Tuesday without any problems. Mr Ayre, who was recently profiled in Newsweek and graced the magazine's cover, is thought to have been in New York last weekend.
The market is eagerly awaiting a quarterly trading update today from PartyGaming, which gets most of its revenues from US poker players. Analysts are forecasting $310.5m of revenues in the second quarter, against $342.7m in the first. The group has been rolling out new games such as blackjack to reduce its reliance on poker, and also boasted that, as of March, 40 per cent of new customers came from outside the US.
On Wednesday, the World Trade Organisation waded into the row over online gaming and agreed to investigate accusations by the Caribbean state of Antigua and Barbuda, which is home to several online gambling groups, that American restrictions on internet gambling are unfair and breach trade rules.Reuse content