Gambling News by Gambling Headquarters

The hot-button topics in Britain these days regarding the Americans aren't only about Iraq. It's also about business. The CEOs of two British Internet gambling sites (both publicly listed) were arrested this summer when they were changing planes on U.S. soil. More have been targeted and legislators are looking at other options to prevent Americans from betting online. The act of accepting bets online is legal in Britain but illegal in the United States. The tricky part is that the Internet crosses borders and so a crackdown by one country to stop Americans from betting on British sites means Washington is flexing its muscles outside its own territory. This is nothing new. During the Prohibition era of the 1920s and early '30s, the Americans went after Canada, where alcohol was still produced (and much of it was then smuggled across the U.S. border). Then there was a dust-up about an alleged "cartel" of uranium producers during the Cold War and for legal reasons some Canadians could not travel to the United States. In 1994, some executives of Sherritt International were put on government blacklists for involvement in a joint venture with Cuba's nickel company. The Americans were angry because the nickel had been U.S.-owned before the Communists confiscated the assets.

And this summer the crackdown has escalated beyond Canada.

On July 17, David Carruthers, then CEO of BetOnSports.com, was arrested while on a layover at Dallas-Fort Worth International Airport, in transit between Costa Rica and Britain. He was charged with racketeering and mail fraud and is under house arrest in St. Louis.

Dozens more were arrested in the United States. Since then, the company fired him and closed its U.S. operation. Some U.S. papers reported that the company, while legitimate in Britain, had shared office space with people in Costa Rica with U.S. criminal records.

The next salvo occurred this month, when Peter Dicks, chairman of Sportingbet PLC, was taken into custody at JFK International Airport in New York as he came off an overseas flight. The warrant was issued by police officials in Louisiana.

Immediately after his arrest, the company was forced to ask the London Stock Exchange to halt trading. Sportingbet is one of the industry leaders in Britain, with US$2.86-billion in revenue in the year that ended July 31, 2005. About two-thirds of bets came from U.S. customers.

Mr. Dicks has been freed on bail and he returned to Britain but must return to the U.S. for his trial.

The online gambling market is estimated at more than US$11- billion annually and is projected to reach US$25-billion by 2010. More than half comes from U.S. gamblers.

There are tax issues in the U.S. So Congress is getting into the act.

In June, the House passed a measure prohibiting banks or other licensed financial institutions from aiding payments to wagering sites in the form of cheques or other transfers. The Senate hasn't ruled yet.

One of the problems is that laws haven't quite caught up with the new Internet reality. The law is clear when it comes to taking bets over the phone, but so far only moral harassment or threats or arresting foreign CEOs on U.S. soil have been used when it comes to e-gambling.