Although the recent crackdown on British Internet gambling operators Sportingbet.com and BetOnSports.com has industry executives concerned, the new CEO of Sportingbet vowed to continue seeking customers in the U.S.
"It’s the U.S. — or what’s the point?" said Andrew McIver, who takes over as Sportingbet’s CEO next month.
McIver will replace Peter Dicks, who resigned his post after he was arrested two weeks ago at JFK Airport in New York as he stepped off an overseas flight.
Dick’s arrest came two months after the CEO of BetOnSports, David Carruthers, was arrested on a layover at a Texas airport.
Sportingbet, which is traded on the London Stock Exchange, is one of the industry leaders in Britain with fiscal revenue of $2.8 billion. About two-thirds of their bets come from U.S. customers.
McIver said online gambling operators that shy away from the U.S. market in favor of international customers are doing their investors a disservice.
"If you take the U.S. business away, they (Internet sites) will be a shadow of their former selves," McIver said.
Sounding like a riverboat gambler, McIver added that the regulatory uncertainty of Internet gambling is part of the industry challenge.
"Everyone knew it was a risk," he said.
That risk offers plenty of rewards. The online gambling market is estimated at more than $11 billion annually and is projected to reach $25 billion by 2010. More than half comes from U.S. gamblers.
The problem is laws haven’t caught up with the reality of the Internet, which transcends borders.
The U.S. Wire Act, upon which federal prosecutors rely upon when proclaiming that "all Internet gambling is illegal," is clear when it comes to taking sports bets over the telephone, but unclear otherwise.
"Prosecutors can show that sports betting is illegal," said Sebastian Sinclair, president of Christiansen Capital Advisors, a gambling industry consulting firm. "But for casino games and poker it’s not so clear."
Even though Internet gambling is widespread in the U.S. and the chances of curtailing or limiting it are practically non-existent, American legislators have so far ignored examining legalizing online betting as an alternative.
Instead, the U.S. House earlier this year passed a measure prohibiting banks and other financial institutions from aiding payments to wagering sites.
The Senate hasn’t acted on the measure or produced its own version.
Another weapon that U.S. prosecutors have used is challenging the media for carrying online gambling ads.
This year, the Sporting News paid $7.2 million to settle a case brought by the Department of Justice, which claimed the publication promoted illegal gambling by accepting ads.
The magazine did not admit or deny liability in paying the settlement.