Feds continue crackdown
on online betting

Sep 12, 2006 4:40 AM

In an action perceived as a continuing crackdown on online gambling, a top executive of a British Internet company was arrested on American soil last week on charges connected with taking bets from gamblers in the United States.

It was the second arrest in two months of a foreign Internet gaming executive in the U.S.

Peter Dicks, 64, chairman of London-based Sportingbet PLC, was taken into custody by airport police after he arrived on an overseas flight at New York’s John F. Kennedy International Airport. He was held on a criminal warrant issued by the state of Louisiana.

Dicks’ arrest follows the arrest on July 17 of David Carruthers, then the chief executive of BetOnSports.com, another online sports book.

Carruthers was on a layover at Dallas-Fort Worth International Airport, in transit between Costa Rica and Great Britain, when he was taken into custody on federal charges including racketeering and mail fraud. He is under house arrest in a St. Louis suburb and awaiting trial early next year. The company discharged Carruthers and has closed its U.S. operation.

Although it is not illegal under U.S. law for Americans to make online bets, federal prosecutors maintain that it is illegal for online operators to solicit or accept them, even when their operations are located outside the U.S.

Experts in gambling law said the arrests underscored an intensified government attack on Internet gambling at a time when the customer base was expanding rapidly worldwide and the technology to mask the source and destination of wagers was improving.

The online gambling market is estimated at more than $11 billion annually and is projected to reach $25 billion by 2010. More than half of that is estimated to come from gamblers in the U.S.

Whether the government can shut down all Americans’ access to such gambling is questionable, said I. Nelson Rose, a gaming law expert at Whittier Law School.

"It’s pretty clear you can’t prevent it completely — the Internet was designed to survive a nuclear war," Rose said.

Other experts — and judges — are divided on how existing laws apply to offshore web sites such as those operated by BetOnSports and Sportingbet. The 1961 federal Wire Act specifically outlawed bets made using the national communications network — principally via telephone — on sporting events.