More than $1.1 billion was wiped off the value of British gaming shares yesterday after US authorities arrested the chief executive and five other officials from a UK online gambling site.
BetOnSports chief executive David Carruthers was arrested at Dallas airport on Sunday as he awaited a flight to Costa Rica, where the company has operations.
Federal officials have charged 11 people in the crackdown on online gambling, alleging they committed conspiracy, racketeering and fraud in taking sports bets from US residents. The Justice Department is also seeking forfeiture of $4.5 billion, cars and computers from BetOnSports and three other companies.
The US House of Representatives approved a bill to crack down on online gambling earlier this month and a similar bill is pending in the Senate.
Betonsport's shares had fallen by 16.6 per cent on Monday and were suspended before trading began. Other gambling sites suffered too, with Partygaming shares closing down 17 per cent and 888 Holdings dropping by 13 per cent. The smaller Sportingbet lost 35 per cent of its share value.
A federal judge in St Louis, Missouri ordered BetOnSports to stop accepting bets placed from within the United States and a federal magistrate ordered Mr Carruthers held until a detention hearing Friday.
Kevin Smith, a spokesman for BetOnSports, said Mr Carruthers and other company officials had no idea before they were arrested that there was an indictment against them.
"Certainly had they told us, we would have been more than willing to negotiate with them and work on whatever these charges are. There wouldn't have been any need to nab him while he's waiting on a layover for a flight," he said. Although online gaming is not explicitly illegal in the United States, the Justice Department has signalled its disapproval, saying it is forbidden by the US Wire Wager Act.
As a result, online gaming firms have settled offshore in locations such as Antigua and Costa Rica and had been operating freely in the US until this week. Last week, the House of Representatives passed a bill that would make it illegal for US banks and credit card issuers to make payments to online gambling sites. The bill's fate in the Senate is uncertain, in part because of exemptions granted for horse racing and lotteries. - (Additional reporting by Reuters)
