Analysts say timing of arrest may be designed to influence legislative process
The internet gambling industry was in disarray last night after the Scottish chief executive of BetOnSports, the Costa Rica-based operator, was arrested by the US federal authorities at Dallas Fort Worth airport.
In a brief hearing at a federal district court in Fort Worth, Texas, prosecutors said that David Carruthers and several others were charged with conspiracy to offer bets on professional and college sports to US residents.
They said BetOnSports accepted wagers on an Internet site and over a toll-free telephone line. Federal Magistrate Judge Charles Bleil ordered the multi-count indictment to be made available to the public, but prosecutors declined to do so ahead of a press conference. Mr Carruthers was detained in custody and will soon be sent to Missouri to face trial.
His detention, which was confirmed earlier by the AIM-listed company in a stock exchange statement, immediately sparked fears of a possible crackdown on internet gambling by the authorities in America, where it is a legal grey area.
Shares of BetOnSports fell 24½p, while rival betting firm Sportingbet was down 42½, already trading below last year's 116p flotation price,6p lower at 103p and 888 Holdings 7p lower at 193p.
BetOnSports said that it did not know why Mr Carruthers had been detained and was unaware that he had been arrested or charged with any offence.
It said that the Scot had been detained while changing flights in America en route from the UK to Costa Rica, where the company is based. It said that it was "seeking clarification as to the basis of the detention".
Mr Carruthers, a former Ladbrokes executive, was changing flights at Dallas Fort Worth airport on Sunday evening when he was stopped while walking through the transit lounge with his wife.
The detention of Mr Carruthers, a British citizen resident in Costa Rica, comes at a sensitive time in Anglo-American business relations after the extradition of the NatWest Three to the US to face changes that they conspired with executives of the collapsed energy giant Enron.
There has also been disquiet in British business circles following the jailing last August in America of Nigel Potter, the former chief executive of Wembley, the gaming operator, over allegations of a bribery conspiracy.
The timing of the detention is also intriguing as a Bill proposing that internet gambling be outlawed has just been passed by the House of Representatives and will now go before the Senate.
Nigel Parson, leisure analyst at Williams de Broë, said the move would "throw online gambling stocks into a spin", adding: "David Carruthers is a prominent advocate of online gambling. The fear that this is an escalation of the anti-lobby will trouble markets."
Greg Harris, an analyst at Cannacord, said: "It is too early to say if this is part of a broader strategy on prevention of internet gambling in the US or if it is the Department of Justice flexing their muscles and trying to influence legislation."