U.S. CRACKING DOWN ON OFFSHORE BETTING INDUSTRY

USA TODAY
Updated 7/19/2006 1:51 AM ET
By Michael McCarthy, USA TODAY

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 …