Who’s Next in the Online Casino Firing Line?
By James Mc
In the wake of Sunday’s arrest by FBI agents of BetOnSports CEO David Carruthers, operators in the UK have been taking urgent legal advice amid fears that US prosecutors may widen their net to target so far unnamed companies. BetonSports shares were yesterday suspended at the company’s request.

The grand jury indictment claims that the defendants ‘and others known and unknown’ constituted a gambling enterprise that conducted unlawful computer and telephone-based betting, in relation to the Wire Act, plus racketeering, conspiracy, fraud and tax evasion charges. BetOnSports, the London-listed online gambling group, is accused of being at the hub of the multibillion-dollar illegal gambling operation, with other companies such as UK-based Sports on the Internet Ltd being labelled as ‘supporters’.

The 22-count indictment is the result of investigations into BetOnSports activities, founders and associates, which have spanned over a decade. The indictment reveals that the company’s US-based founder Gary Kaplan was previously arrested in 1993 for illegal gambling activity in and around New York, after which he fled to Antigua via Florida, where he continued his practice. These operations are said to have taken more than $3.3bn (£1.8bn) in bets from the US, and the justice department is seeking forfeiture of $4.5bn and has issued a warrant for his arrest. He holds a 15% stake in the company after cashing in a further 29% interest for £29m last summer.

Mr Carruthers is now in custody in Fort Worth, Texas, following his arrest by FBI officers as he changed planes at a US airport in transit between his home in Britain and Costa Rica. Mr Kaplan's brother, Neil Kaplan, is in custody in Fort Pierce, Florida, and three others have been arrested or are in custody, with warrants being issued for the remaining defendants.

Trading in BetOnSports shares was suspended on the Aim market yesterday morning at the request of the company, but the repercussions were felt across the gambling sector. Online gaming has profits of $12bn in Britain, half of which comes from the US. This case raises doubts over the entire industry and the sector's shares tumbled yesterday. Leading operator Sportingbet closed down more than 35% at 182p whilst other online gambling groups with strong US exposure but no sports betting were also hit, though not as severely. PartyGaming was down 17% at 85.25p, and 888.com fell 12% to 168.5p. Both William Hill and Ladbrokes, whose policies refuse wagers from the US, lost just over 1% on their shares yesterday.

Lawrence Walters, a Florida lawyer, said prosecutors appeared to be targeting BetOnSports as a test case: 'This case is going to be watched very carefully. It is going to set a precedent for an entire multibillion-dollar industry.' The justice department said it would be seeking extradition for all the defendants in the BetOnSports case. But lawyers have said it might face difficulties in Costa Rica and the UK where online betting is not an offence.

 
 
 
 
 
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