Sunday, July 30, 2006
clamp down on Internet casinos
For the complete article go to:
http://www.nytimes.com/2006/07/25/business/25gamble.html?pagewanted=1&_r=1&ref=worldbusiness
The Gambling Is Virtual; the Money Is Real
Sign In to E-Mail This Print Single Page Reprints Save
By MATT RICHTEL and HEATHER TIMMONS
Published: July 25, 2006
Can the United States handcuff online wagering?
Skip to next paragraph
Glen Walker, a professional sports bettor in North Carolina who places up to 70 bets a week of $2,000 to $5,000 each during football season, does not think so. “They’re not going to stop the offshore sports books,” Mr. Walker said. A crackdown will “just force it back to the black market.”
Last week, one such wagering site, BetOnSports.com, a publicly traded company in Britain, became the focal point of an American crackdown on offshore casinos, where gamblers anywhere in the world can use the highly profitable sites to place wagers on sporting events. They can also play casino games like blackjack and poker from their personal computers.
Federal agents arrested the British chief executive of BetOnSports, David Carruthers, who was in the United States on a flight layover. He is in custody in Fort Worth; the betting site has temporarily suspended operations to satisfy a temporary restraining order that prohibits the company from taking bets from United States residents. Mr. Carruthers is awaiting a hearing on his detention.
In Washington, the House overwhelmingly approved legislation recently that would clamp down on Internet casinos in part by restricting the ability of American financial institutions to process wagers.
The legislative-prosecutorial one-two punch appears to be the most concerted effort yet by the federal government to undermine Internet gambling in an era of well-organized, publicly owned offshore casinos. For the first time, Washington has succeeded in temporarily shutting down a publicly owned site and its effort has gained the attention of the operators, whose share prices plummeted last week.
Still, few experts expect the crackdown to do anything more than dent the industry. Sebastian Sinclair, an analyst with Christiansen Capital Advisors, which tracks online gambling trends, said offshore gambling could be “curtailed but it cannot be stopped.”
Other experts see the recent moves as little more than an elaborate cat-and-mouse game serving only to benefit Las Vegas and Atlantic City casinos, along with Indian gambling operations, rather than seriously protecting Americans from falling prey to excessive gambling.
Some eight million Americans like Mr. Walker wager $6 billion annually through the Internet, many making bets on their favorite sports team or the N.C.A.A. basketball pool. About half of all online wagers come from the United States.
Critics say that online gambling is the equivalent of putting a slot machine in every home, providing an easy chance to lose money with a few mouse clicks, all without the social controls at a bricks-and-mortar casino.
Mr. Walker disagrees. “We’re not doing anything immoral or illegal,’’ he insisted. “I just don’t see that I’m harming anyone.”
While prosecutors argue that Internet casinos violate the law, there is no federal prohibition against actually placing a bet. So how much success the federal push can have “is a very profound question,” said Representative Jim Leach, Republican of Iowa, the co-author of the legislation, who says the gambling is detrimental to families and the economy.
But even he concedes that Washington’s best efforts will lead only “to a reduction but not necessarily to an ending” of online gambling.
The question of further curbing Internet gambling has been a perennial issue in Congress in recent years. But people involved with the legislation say the reason for its success, at least in the House, is mainly explained by lawmakers wanting to distance themselves from the corruption scandal involving the convicted lobbyist Jack Abramoff and his association with Indian casinos. Mr. Abramoff had lobbied vigorously against versions of the bill in the past. Still, some politicians in the House came out strongly against the bill, including Representative Barney Frank, Democrat of Massachusetts, who called it “cultural authoritarianism.”
http://www.nytimes.com/2006/07/25/business/25gamble.html?pagewanted=1&_r=1&ref=worldbusiness
The Gambling Is Virtual; the Money Is Real
Sign In to E-Mail This Print Single Page Reprints Save
By MATT RICHTEL and HEATHER TIMMONS
Published: July 25, 2006
Can the United States handcuff online wagering?
Skip to next paragraph
Glen Walker, a professional sports bettor in North Carolina who places up to 70 bets a week of $2,000 to $5,000 each during football season, does not think so. “They’re not going to stop the offshore sports books,” Mr. Walker said. A crackdown will “just force it back to the black market.”
Last week, one such wagering site, BetOnSports.com, a publicly traded company in Britain, became the focal point of an American crackdown on offshore casinos, where gamblers anywhere in the world can use the highly profitable sites to place wagers on sporting events. They can also play casino games like blackjack and poker from their personal computers.
Federal agents arrested the British chief executive of BetOnSports, David Carruthers, who was in the United States on a flight layover. He is in custody in Fort Worth; the betting site has temporarily suspended operations to satisfy a temporary restraining order that prohibits the company from taking bets from United States residents. Mr. Carruthers is awaiting a hearing on his detention.
In Washington, the House overwhelmingly approved legislation recently that would clamp down on Internet casinos in part by restricting the ability of American financial institutions to process wagers.
The legislative-prosecutorial one-two punch appears to be the most concerted effort yet by the federal government to undermine Internet gambling in an era of well-organized, publicly owned offshore casinos. For the first time, Washington has succeeded in temporarily shutting down a publicly owned site and its effort has gained the attention of the operators, whose share prices plummeted last week.
Still, few experts expect the crackdown to do anything more than dent the industry. Sebastian Sinclair, an analyst with Christiansen Capital Advisors, which tracks online gambling trends, said offshore gambling could be “curtailed but it cannot be stopped.”
Other experts see the recent moves as little more than an elaborate cat-and-mouse game serving only to benefit Las Vegas and Atlantic City casinos, along with Indian gambling operations, rather than seriously protecting Americans from falling prey to excessive gambling.
Some eight million Americans like Mr. Walker wager $6 billion annually through the Internet, many making bets on their favorite sports team or the N.C.A.A. basketball pool. About half of all online wagers come from the United States.
Critics say that online gambling is the equivalent of putting a slot machine in every home, providing an easy chance to lose money with a few mouse clicks, all without the social controls at a bricks-and-mortar casino.
Mr. Walker disagrees. “We’re not doing anything immoral or illegal,’’ he insisted. “I just don’t see that I’m harming anyone.”
While prosecutors argue that Internet casinos violate the law, there is no federal prohibition against actually placing a bet. So how much success the federal push can have “is a very profound question,” said Representative Jim Leach, Republican of Iowa, the co-author of the legislation, who says the gambling is detrimental to families and the economy.
But even he concedes that Washington’s best efforts will lead only “to a reduction but not necessarily to an ending” of online gambling.
The question of further curbing Internet gambling has been a perennial issue in Congress in recent years. But people involved with the legislation say the reason for its success, at least in the House, is mainly explained by lawmakers wanting to distance themselves from the corruption scandal involving the convicted lobbyist Jack Abramoff and his association with Indian casinos. Mr. Abramoff had lobbied vigorously against versions of the bill in the past. Still, some politicians in the House came out strongly against the bill, including Representative Barney Frank, Democrat of Massachusetts, who called it “cultural authoritarianism.”
Tuesday, July 25, 2006
Latest on BetonSports
This is Money is proud to be approved by the Plain English Campaign
http://www.thisismoney.co.uk/news/article.html?in_article_id=411059&in_page_id=2
Jailed BetonSports chief fired
Evening Standard
25 July 2006
DAVID CARRUTHERS, chief executive of online gambling site BetonSports, was today fired following his arrest in the US last week as the company sought to distance itself from reports of sleazy corporate parties.
DAVID CARRUTHERS: Arrested in the US last week
Carruthers, held in a prison cell outside Dallas on fraud charges, was the last BetonSports director pre-dating the July 2004 flotation of the company still working there.
But weekend reports claimed he welcomed high-rolling guests to parties at the company's Costa Rica spa and health club with American prostitutes flown in for the occasion.
BetonSports said today: 'All these allegations relate to the time prior to...its July 2004 float.'
It said it had been unable to gain access to Carruthers, only having talked to his legal team. However, today's action added to speculation that he could be preparing a plea bargain to testify against company founder Gary Kaplan, who was the subject of most charges in the Department of Justice indictment.
http://www.thisismoney.co.uk/news/article.html?in_article_id=411059&in_page_id=2
Jailed BetonSports chief fired
Evening Standard
25 July 2006
DAVID CARRUTHERS, chief executive of online gambling site BetonSports, was today fired following his arrest in the US last week as the company sought to distance itself from reports of sleazy corporate parties.
DAVID CARRUTHERS: Arrested in the US last week
Carruthers, held in a prison cell outside Dallas on fraud charges, was the last BetonSports director pre-dating the July 2004 flotation of the company still working there.
But weekend reports claimed he welcomed high-rolling guests to parties at the company's Costa Rica spa and health club with American prostitutes flown in for the occasion.
BetonSports said today: 'All these allegations relate to the time prior to...its July 2004 float.'
It said it had been unable to gain access to Carruthers, only having talked to his legal team. However, today's action added to speculation that he could be preparing a plea bargain to testify against company founder Gary Kaplan, who was the subject of most charges in the Department of Justice indictment.
Thursday, July 20, 2006
President George Bush seeks advise from China on building a fire wall
US seeks to curb online gambling
Rob Lever | Washington, United States
20 July 2006 09:54
United States authorities are raising the stakes against internet gambling with their biggest prosecution effort to date, but backers of online wagering are not yet ready to fold.
An indictment unsealed on Monday charges the operators, British-incorporated BetOnSports, with illegally taking bets from US residents and failing to pay US taxes on $3,3-billion in wagers from the United States.
Some named in the indictment, including British national David Carruthers, chief executive of the group, who could face years in prison if convicted.
Analysts who follow the industry say the indictment marks the most ambitious effort to prosecute operators of offshore gaming websites.
However, they noted that authorities were taking advantage of a quirk in US law that clearly makes sports betting on the internet illegal but is much more ambiguous about other forms of online gambling, such as casino-style games and lotteries.
"Confusing and sometimes conflicting state and federal laws have left room for a range of legal interpretation," said Ben Macklin, a senior analyst at the research firm eMarketer.
"However, there has been a renewed push from the government to curb online gambling activity."
"The Justice Department has said [all] internet gambling is prohibited, but most legal experts would say they are wrong, that this only applies to sports betting," said Joseph Kelly, a legal scholar at the State University of New York College at Buffalo, who has consulted the government of Antigua and others on US law.
Kelly said it was an unusual coincidence that the indictment -- which was handed down in June but unsealed this week -- came after the House of Representatives passed a new bill banning most forms of web gambling in the US.
"Why would Congress try to make something illegal if it is already illegal?" he said.
Some estimates show that online gambling globally is a $12-billion business, with nearly half of the revenues coming from US residents.
Are gambling website operators quaking over the prospect of US crackdown, with the long arm of the law stretching abroad? Kelly and others say this is not happening yet.
"If they've got good legal counsel, they would be told there is a risk, but the risk is minimal," he said.
"None of the other countries that license internet gambling is going to allow the US to extradite their licensees."
However, Kelly said that following the latest indictments and arrest of a British national during a plane change in the United States, "My advice to anyone in the business is, 'Don't come into the United States, even to change planes.'"
"Meanwhile panic is also spreading amongst operators," said the Online Wire, a website that follows sports betting.
"The vast majority of online gaming operators are on a cautious wait-and-see mode."
Some who follow the industry say the US may try to up the ante further by seeking charges against other high-profile operators, including Calvin Ayre, a Canadian-born billionaire who founded the gaming website Bodog.com and is ranked by Forbes magazine as 746th richest person in the world.
But Ayre was quoted by the website Eye on Gambling (eog.com) that he planned to attend a Las Vegas conference for the site next week.
"Why stop now?" he told the website.
Some watchers of the industry expressed disdain for the latest US crackdown.
"The best way to provide consumer protection is licensing and regulating," said Keith Furlong, vice-president of the Interactive Gaming Council, a Canadian-based group representing the industry.
The US ban "is are hurting the most responsible gaming companies."
"The US will never catch Osama Bin Laden, but they got their big fish, David Carruthers, CEO of previously unknown terrorist group BetOnSports," wrote eog.com's Joe Duffy.
"Thank you, Department of Justice, for making the world safer for democracy." - AFP
Rob Lever | Washington, United States
20 July 2006 09:54
United States authorities are raising the stakes against internet gambling with their biggest prosecution effort to date, but backers of online wagering are not yet ready to fold.
An indictment unsealed on Monday charges the operators, British-incorporated BetOnSports, with illegally taking bets from US residents and failing to pay US taxes on $3,3-billion in wagers from the United States.
Some named in the indictment, including British national David Carruthers, chief executive of the group, who could face years in prison if convicted.
Analysts who follow the industry say the indictment marks the most ambitious effort to prosecute operators of offshore gaming websites.
However, they noted that authorities were taking advantage of a quirk in US law that clearly makes sports betting on the internet illegal but is much more ambiguous about other forms of online gambling, such as casino-style games and lotteries.
"Confusing and sometimes conflicting state and federal laws have left room for a range of legal interpretation," said Ben Macklin, a senior analyst at the research firm eMarketer.
"However, there has been a renewed push from the government to curb online gambling activity."
"The Justice Department has said [all] internet gambling is prohibited, but most legal experts would say they are wrong, that this only applies to sports betting," said Joseph Kelly, a legal scholar at the State University of New York College at Buffalo, who has consulted the government of Antigua and others on US law.
Kelly said it was an unusual coincidence that the indictment -- which was handed down in June but unsealed this week -- came after the House of Representatives passed a new bill banning most forms of web gambling in the US.
"Why would Congress try to make something illegal if it is already illegal?" he said.
Some estimates show that online gambling globally is a $12-billion business, with nearly half of the revenues coming from US residents.
Are gambling website operators quaking over the prospect of US crackdown, with the long arm of the law stretching abroad? Kelly and others say this is not happening yet.
"If they've got good legal counsel, they would be told there is a risk, but the risk is minimal," he said.
"None of the other countries that license internet gambling is going to allow the US to extradite their licensees."
However, Kelly said that following the latest indictments and arrest of a British national during a plane change in the United States, "My advice to anyone in the business is, 'Don't come into the United States, even to change planes.'"
"Meanwhile panic is also spreading amongst operators," said the Online Wire, a website that follows sports betting.
"The vast majority of online gaming operators are on a cautious wait-and-see mode."
Some who follow the industry say the US may try to up the ante further by seeking charges against other high-profile operators, including Calvin Ayre, a Canadian-born billionaire who founded the gaming website Bodog.com and is ranked by Forbes magazine as 746th richest person in the world.
But Ayre was quoted by the website Eye on Gambling (eog.com) that he planned to attend a Las Vegas conference for the site next week.
"Why stop now?" he told the website.
Some watchers of the industry expressed disdain for the latest US crackdown.
"The best way to provide consumer protection is licensing and regulating," said Keith Furlong, vice-president of the Interactive Gaming Council, a Canadian-based group representing the industry.
The US ban "is are hurting the most responsible gaming companies."
"The US will never catch Osama Bin Laden, but they got their big fish, David Carruthers, CEO of previously unknown terrorist group BetOnSports," wrote eog.com's Joe Duffy.
"Thank you, Department of Justice, for making the world safer for democracy." - AFP
Wednesday, July 19, 2006
Damn Bible Thumpers
Online Casino Markets React To Arrest.
ONLINE CASINO MARKETS REACT TO CARRUTHERS ARREST (update)
London and Canadian online gambling stocks take the hit from DoJ action
Online gambling executives and investors alike will be anxiously watching the stock market scene today (Wednesday) in the wake of stock declines that have hammered the industry following the arrest and continued detention of Bet on Sports CEO David Carruthers over the weekend.
Late Tuesday, London gambling stocks and to a lesser extent Canadian gambling shares had declined sharply, presumably as a result of nervous investors dumping their holdings.
BetonSports shares fell by as much as 25 percent before trading was halted at the company's request, but the biggest fallout hit Sportingbet, where shares fell by 100p to 282p, almost half their level before BetOnSports announced on Monday that Carruthers, had been detained. The stock fell 36 percent Tuesday after falling 13 percent on Monday.
Although it does not offer sport betting, PartyGaming, the internet poker company, fell 17¾p to 85¼p, down from a flotation price last year of 116p. Almost GBP 1 billion has been wiped from its market value in two days. Shares dropped 17 percent on Tuesday on the London Stock Exchange and played a role in dragging the FTSE index lower.
888 Holdings, fell 24½p to 168½p.
Leisure and Gaming shares fell 21p to 71½p.
In Vienna, BetandWin.com Interactive Entertainment AG (newly branded Bwin) tumbled 24 percent
Playtech lost almost a third of its price, as confusion reigned about the scope of the DoJ's planned actions
BetOnSports asked for trading in its shares to be suspended because of uncertainty over its future. The company also temporarily closed its main website to business, and said that its lawyers were reviewing implications of a federal temporary restraining order to stop it taking bets from Americans and require it to return punters’ money held in accounts.
A federal court issued the temporary restraining order to prevent BetOnSports from accepting bets in the United States, which is reported to be the company's biggest market. In terms of the order, it is understood the company is required to stop accepting bets from the US; to place notices on its US-based websites saying it does not accept bets on sporting events and to place full-page newspaper adverts saying telephone betting services are "a violation of US law".
Canadian stocks also took a few dents, although to a lesser extent than the London companies.
Cryptologic shares dropped $3.66 to $21.22 or 14.7 percent on the Toronto Stock Exchange, while Fun Technologies saw less of a drop but still lost 3.7 percent as their shares dropped 20¢ to $5.20.
Chartwell Technology, Inc., a Vancouver-based company, was also down 2¢ to end up at $2.35, and shares in LasVegasFromHome.com Entertainment Inc. were down 15 percent, dropping to 17¢.
CryptoLogic said Tuesday it did not expect a serious impact. "While there's no question this news has created volatility in the broader Internet gaming market, we anticipate little or no long-term impact on our customers, who have no involvement in sports betting in the U.S," a spokesman for the Toronto-based company said.
"For the Internet casino market, little has changed - the uncertainty in the U.S. continues, and this validates CryptoLogic's long-standing focus on the UK and Europe, and on blue-chip customers that operate in markets that embrace Internet gaming."
Before trading in London started on Wednesday, the dismal picture looked like this:
Playtech down 28 percent (down 33 percent at one stage)
Neteller down 15 percent
Fireone down about 20 percent
Empire Online down 8 percent
SportingBet down 44 percent
888.com down 16 percent
Partygaming down by over 17 percent, a drop of over 22 percent in 2 days
Betonsport down 16 percent
Fairgound down 5 percent
UK FALLOUT OVER THE TWO DAYS
PartyGaming
Market value: GBP 3.41billion: –22 percent
Sportingbet
Market value: GBP 768 million: –44 percent
888 Holdings
Market value: GBP 568 million: –16 percent
City analysts were divided over implications for other internet gambling companies that have American customers. Some felt that the language of the US indictment amounted to a warning to the wider industry, but others said it appeared to be a company-specific issue relating mainly to BetOnSports’ American founder and former owner, Gary Kaplan.
The indictment claims that Kaplan, who was first arrested in 1993 over illegal gambling, failed to pay excise taxes on more than $3.3 billion of wagers from the US. The Department of Justice is claiming $4.5 billion forfeiture from Kaplan, who still has a 15 per cent stake in BetOnSports. Kaplan who remains free is believed to reside in Costa Rica, and has declined to comment on the affair.
Online gambling companies said that they were analysing implications with their lawyers. Unsurprisingly, no executives had any immediate plans to travel to America.
Carruthers, a British citizen was detained Sunday by FBI and IRS officials as he transited the USA at Dallas airport on his way home to Costa Rica from the UK. After several hours held incommunicado and in detention in Tarrant County jail, the businessman appeared briefly in a local court on a 27 page grand jury indictment against himself and 11 other people believed to be associated with the company in the past.
The 22 charges included racketeering, tax evasion and wire fraud accusations, running an illegal gambling operation and money-laundering. The high-profile case is being prosecuted by a newly appointed U.S. Attorney in St. Louis, Catherine Hanaway, and accuses Kaplan of taking bets from undercover federal agents.
Tim Evans, an attorney for Carruthers, said a detention hearing would be held Friday in Fort Worth to determine if Carruthers must remain in jail. Carruthers will be arraigned in St. Louis on the racketeering charges at a future date, he said.
"The view of the Department of Justice is and has been that Internet gambling is illegal," said Brian Sierra, a spokesperson for the DoJ. According to Sierra, the new laws and Congress' interest in online gambling have nothing to do with the latest round of charges lodged by the Department of Justice.
"We're not trying to send a grand scale message here," he said. "We've been saying it for years: Internet gambling is illegal."
Sierra says the department's position is and has always been that anyone either in or outside of the U.S. who operates illegal online gambling operations to take bets from U.S. residents is committing a crime. Period.
The CATO Institute, an organisation that scrutinizes public policy has a different view. "It's a moral crusade," claimed Radley Balko, a policy analyst. "These guys have a personal opposition to gambling and they want to impose that on the rest of the country."
American anti-online gaming legislators such as Sen. Jon Kyl and Rep. Bob Goodlatte were quick to seize on the action to publicise their attempts to ban Internet gambling.
"This recent indictment of online gambling executives strengthens the need for legislation to ban Internet gambling," Kyl said in a statement. "I am hopeful that legislation I intend on moving through the Senate this year will provide the Justice Department with the tools necessary to continue aggressively pursuing those that wish to circumvent the rules and engage in this sort of illegal activity," he said.
Goodlatte praised the prosecution. "We're very pleased that the Justice Department is taking action here with the laws they have available," he told Reuters. "We join with them in trying to make it clear that the law covers all forms of gambling. It is quite clear that the Wire Act covers sports betting," Goodlatte said. "But the Wire Act because it was written in 1961 is not at all clear as to whether it covers other forms of gambling."
The existing law does not clearly ban such things as a virtual roulette wheel, poker and other kinds of online gaming, Goodlatte said, also drawing attention to the fact that executives with other overseas gambling companies should take note of the prosecution.
"They should be wary of the United States exercising its treaty rights to seek extradition," he said. "Knowingly taking bets from U.S. citizens is against the laws of many states, and they should be prosecuted."
However, the Costa Rican based CEO of the Bodog group, Calvin Ayre, who had reportedly travelled through the US only days before Carruthers, said in a media statement that although the arrest could appear "ominous" to other businesses, this was not the case at all. "The charges are specific to the person and company at issue, and has nothing to do with Bodog.com's current or previous business practices," he claimed.
In his statement, he defended Bodog.com, saying that it has "...an innovative and different business model that allows us to run our entertainment enterprise within the laws set out in each of the jurisdictions where we conduct our business.
"Bodog.com will continue to carry on its business as usual and our organisation is confident the U.S. government's actions will have no impact on our operations," he added.
Antiguan Finance Minister Errol Cort said he would closely monitor the legal action against BetOnSports plc following the arrest. "This is of major concern to us," Cort told reporters Tuesday during a break in a government economic forum. "This could have implications on individuals who are doing business in Antigua."
Antigua and Barbuda has licensed 30 online gambling firms, including BetOnSports, and has welcomed the industry as a way to diversify its economy. The island government has filed a challenge against U.S. restrictions on online gambling with the World Trade organisation.
Leading online gambling legal expert Lawrence Walters told the Guardian newspaper: "This case is going to be watched very carefully. It is going to set a precedent for an entire multibillion-dollar industry."
The main prosecutor in the BetonSports case, U.S. Attorney Catherine Hanaway claimed on a CNBC report that aired Tuesday that her government went after BetonSports because they "wrongfully" claimed to be the "Biggest licensed and regulated" gambling company in the world, amongst other things. Hanaway took issue with the "licensed and regulated" claim.
Several sector observers and analysts in London opined Tuesday that investors were overreacting by selling off online gambling holdings: “The indictment seems to be very BetOnSports-specific, and the market seems to be treating all online gaming companies in the same manner,” said Wayne Brown, an analyst with Altium Securities in London.
Others were puzzled by the inclusion of tax evasion charges relating to allegedly ill-gotten gains specified in the indictment, clearly unaware that US law makes provision for this sort of questionable income to be taxed.
Some companies have steered clear of the US because of doubts about legality, while others avoid operating sports books and only take bets from the US on casino and poker games. But the DoJ indictment refers to BetonSports taking bets from the US on casino-type games as well as sports and sporting events.
Jim Halpert, partner at the DLA Pipe law firm in Washington, DC, said: "The record of enforcement in this area is one of periodic high-profile enforcement actions, designed to deter what the Department of Justice views as ongoing systematic violations of US law."
A US crackdown on online gambling could lead to extraditions from Britain even though British laws in this area are much less tough, leading lawyers said on Tuesday.
River City CEO Sue Schneider said that even if BetOnSports were shut down, there were many other offshore sites that would take its place. Some online sports books might stop taking bets from U.S. residents, but only if the United States is a small part of their business, Schneider predicted. The indictment is likely to have even less effect on online casinos — those that take bets on poker or other games, but not on sporting events.
US legal expert Anthony Cabot said that over the past decade, federal officials have prosecuted many operators of online sports books with U.S. ownership or operations because federal law prohibits using phone wires to place those bets.
In a celebrated case from 2000, prosecutors won a conviction against Jay Cohen, a U.S. citizen who ran an operation in Antigua that took sports bets from Americans over the Internet. He was sentenced to 21 months in prison. But the wire law doesn't cover other types of casino betting, a federal appeals court in New Orleans ruled. That has left some doubt about whether prosecutors can shut down poker and other casino games that target American players, Cabot said.
And unless the operators set foot in the United States — as Carruthers and Cohen did — it's difficult to extradite them, Cabot said.
ONLINE CASINO MARKETS REACT TO CARRUTHERS ARREST (update)
London and Canadian online gambling stocks take the hit from DoJ action
Online gambling executives and investors alike will be anxiously watching the stock market scene today (Wednesday) in the wake of stock declines that have hammered the industry following the arrest and continued detention of Bet on Sports CEO David Carruthers over the weekend.
Late Tuesday, London gambling stocks and to a lesser extent Canadian gambling shares had declined sharply, presumably as a result of nervous investors dumping their holdings.
BetonSports shares fell by as much as 25 percent before trading was halted at the company's request, but the biggest fallout hit Sportingbet, where shares fell by 100p to 282p, almost half their level before BetOnSports announced on Monday that Carruthers, had been detained. The stock fell 36 percent Tuesday after falling 13 percent on Monday.
Although it does not offer sport betting, PartyGaming, the internet poker company, fell 17¾p to 85¼p, down from a flotation price last year of 116p. Almost GBP 1 billion has been wiped from its market value in two days. Shares dropped 17 percent on Tuesday on the London Stock Exchange and played a role in dragging the FTSE index lower.
888 Holdings, fell 24½p to 168½p.
Leisure and Gaming shares fell 21p to 71½p.
In Vienna, BetandWin.com Interactive Entertainment AG (newly branded Bwin) tumbled 24 percent
Playtech lost almost a third of its price, as confusion reigned about the scope of the DoJ's planned actions
BetOnSports asked for trading in its shares to be suspended because of uncertainty over its future. The company also temporarily closed its main website to business, and said that its lawyers were reviewing implications of a federal temporary restraining order to stop it taking bets from Americans and require it to return punters’ money held in accounts.
A federal court issued the temporary restraining order to prevent BetOnSports from accepting bets in the United States, which is reported to be the company's biggest market. In terms of the order, it is understood the company is required to stop accepting bets from the US; to place notices on its US-based websites saying it does not accept bets on sporting events and to place full-page newspaper adverts saying telephone betting services are "a violation of US law".
Canadian stocks also took a few dents, although to a lesser extent than the London companies.
Cryptologic shares dropped $3.66 to $21.22 or 14.7 percent on the Toronto Stock Exchange, while Fun Technologies saw less of a drop but still lost 3.7 percent as their shares dropped 20¢ to $5.20.
Chartwell Technology, Inc., a Vancouver-based company, was also down 2¢ to end up at $2.35, and shares in LasVegasFromHome.com Entertainment Inc. were down 15 percent, dropping to 17¢.
CryptoLogic said Tuesday it did not expect a serious impact. "While there's no question this news has created volatility in the broader Internet gaming market, we anticipate little or no long-term impact on our customers, who have no involvement in sports betting in the U.S," a spokesman for the Toronto-based company said.
"For the Internet casino market, little has changed - the uncertainty in the U.S. continues, and this validates CryptoLogic's long-standing focus on the UK and Europe, and on blue-chip customers that operate in markets that embrace Internet gaming."
Before trading in London started on Wednesday, the dismal picture looked like this:
Playtech down 28 percent (down 33 percent at one stage)
Neteller down 15 percent
Fireone down about 20 percent
Empire Online down 8 percent
SportingBet down 44 percent
888.com down 16 percent
Partygaming down by over 17 percent, a drop of over 22 percent in 2 days
Betonsport down 16 percent
Fairgound down 5 percent
UK FALLOUT OVER THE TWO DAYS
PartyGaming
Market value: GBP 3.41billion: –22 percent
Sportingbet
Market value: GBP 768 million: –44 percent
888 Holdings
Market value: GBP 568 million: –16 percent
City analysts were divided over implications for other internet gambling companies that have American customers. Some felt that the language of the US indictment amounted to a warning to the wider industry, but others said it appeared to be a company-specific issue relating mainly to BetOnSports’ American founder and former owner, Gary Kaplan.
The indictment claims that Kaplan, who was first arrested in 1993 over illegal gambling, failed to pay excise taxes on more than $3.3 billion of wagers from the US. The Department of Justice is claiming $4.5 billion forfeiture from Kaplan, who still has a 15 per cent stake in BetOnSports. Kaplan who remains free is believed to reside in Costa Rica, and has declined to comment on the affair.
Online gambling companies said that they were analysing implications with their lawyers. Unsurprisingly, no executives had any immediate plans to travel to America.
Carruthers, a British citizen was detained Sunday by FBI and IRS officials as he transited the USA at Dallas airport on his way home to Costa Rica from the UK. After several hours held incommunicado and in detention in Tarrant County jail, the businessman appeared briefly in a local court on a 27 page grand jury indictment against himself and 11 other people believed to be associated with the company in the past.
The 22 charges included racketeering, tax evasion and wire fraud accusations, running an illegal gambling operation and money-laundering. The high-profile case is being prosecuted by a newly appointed U.S. Attorney in St. Louis, Catherine Hanaway, and accuses Kaplan of taking bets from undercover federal agents.
Tim Evans, an attorney for Carruthers, said a detention hearing would be held Friday in Fort Worth to determine if Carruthers must remain in jail. Carruthers will be arraigned in St. Louis on the racketeering charges at a future date, he said.
"The view of the Department of Justice is and has been that Internet gambling is illegal," said Brian Sierra, a spokesperson for the DoJ. According to Sierra, the new laws and Congress' interest in online gambling have nothing to do with the latest round of charges lodged by the Department of Justice.
"We're not trying to send a grand scale message here," he said. "We've been saying it for years: Internet gambling is illegal."
Sierra says the department's position is and has always been that anyone either in or outside of the U.S. who operates illegal online gambling operations to take bets from U.S. residents is committing a crime. Period.
The CATO Institute, an organisation that scrutinizes public policy has a different view. "It's a moral crusade," claimed Radley Balko, a policy analyst. "These guys have a personal opposition to gambling and they want to impose that on the rest of the country."
American anti-online gaming legislators such as Sen. Jon Kyl and Rep. Bob Goodlatte were quick to seize on the action to publicise their attempts to ban Internet gambling.
"This recent indictment of online gambling executives strengthens the need for legislation to ban Internet gambling," Kyl said in a statement. "I am hopeful that legislation I intend on moving through the Senate this year will provide the Justice Department with the tools necessary to continue aggressively pursuing those that wish to circumvent the rules and engage in this sort of illegal activity," he said.
Goodlatte praised the prosecution. "We're very pleased that the Justice Department is taking action here with the laws they have available," he told Reuters. "We join with them in trying to make it clear that the law covers all forms of gambling. It is quite clear that the Wire Act covers sports betting," Goodlatte said. "But the Wire Act because it was written in 1961 is not at all clear as to whether it covers other forms of gambling."
The existing law does not clearly ban such things as a virtual roulette wheel, poker and other kinds of online gaming, Goodlatte said, also drawing attention to the fact that executives with other overseas gambling companies should take note of the prosecution.
"They should be wary of the United States exercising its treaty rights to seek extradition," he said. "Knowingly taking bets from U.S. citizens is against the laws of many states, and they should be prosecuted."
However, the Costa Rican based CEO of the Bodog group, Calvin Ayre, who had reportedly travelled through the US only days before Carruthers, said in a media statement that although the arrest could appear "ominous" to other businesses, this was not the case at all. "The charges are specific to the person and company at issue, and has nothing to do with Bodog.com's current or previous business practices," he claimed.
In his statement, he defended Bodog.com, saying that it has "...an innovative and different business model that allows us to run our entertainment enterprise within the laws set out in each of the jurisdictions where we conduct our business.
"Bodog.com will continue to carry on its business as usual and our organisation is confident the U.S. government's actions will have no impact on our operations," he added.
Antiguan Finance Minister Errol Cort said he would closely monitor the legal action against BetOnSports plc following the arrest. "This is of major concern to us," Cort told reporters Tuesday during a break in a government economic forum. "This could have implications on individuals who are doing business in Antigua."
Antigua and Barbuda has licensed 30 online gambling firms, including BetOnSports, and has welcomed the industry as a way to diversify its economy. The island government has filed a challenge against U.S. restrictions on online gambling with the World Trade organisation.
Leading online gambling legal expert Lawrence Walters told the Guardian newspaper: "This case is going to be watched very carefully. It is going to set a precedent for an entire multibillion-dollar industry."
The main prosecutor in the BetonSports case, U.S. Attorney Catherine Hanaway claimed on a CNBC report that aired Tuesday that her government went after BetonSports because they "wrongfully" claimed to be the "Biggest licensed and regulated" gambling company in the world, amongst other things. Hanaway took issue with the "licensed and regulated" claim.
Several sector observers and analysts in London opined Tuesday that investors were overreacting by selling off online gambling holdings: “The indictment seems to be very BetOnSports-specific, and the market seems to be treating all online gaming companies in the same manner,” said Wayne Brown, an analyst with Altium Securities in London.
Others were puzzled by the inclusion of tax evasion charges relating to allegedly ill-gotten gains specified in the indictment, clearly unaware that US law makes provision for this sort of questionable income to be taxed.
Some companies have steered clear of the US because of doubts about legality, while others avoid operating sports books and only take bets from the US on casino and poker games. But the DoJ indictment refers to BetonSports taking bets from the US on casino-type games as well as sports and sporting events.
Jim Halpert, partner at the DLA Pipe law firm in Washington, DC, said: "The record of enforcement in this area is one of periodic high-profile enforcement actions, designed to deter what the Department of Justice views as ongoing systematic violations of US law."
A US crackdown on online gambling could lead to extraditions from Britain even though British laws in this area are much less tough, leading lawyers said on Tuesday.
River City CEO Sue Schneider said that even if BetOnSports were shut down, there were many other offshore sites that would take its place. Some online sports books might stop taking bets from U.S. residents, but only if the United States is a small part of their business, Schneider predicted. The indictment is likely to have even less effect on online casinos — those that take bets on poker or other games, but not on sporting events.
US legal expert Anthony Cabot said that over the past decade, federal officials have prosecuted many operators of online sports books with U.S. ownership or operations because federal law prohibits using phone wires to place those bets.
In a celebrated case from 2000, prosecutors won a conviction against Jay Cohen, a U.S. citizen who ran an operation in Antigua that took sports bets from Americans over the Internet. He was sentenced to 21 months in prison. But the wire law doesn't cover other types of casino betting, a federal appeals court in New Orleans ruled. That has left some doubt about whether prosecutors can shut down poker and other casino games that target American players, Cabot said.
And unless the operators set foot in the United States — as Carruthers and Cohen did — it's difficult to extradite them, Cabot said.
Tuesday, July 18, 2006
BetonSports
Reuters
BETonSPORTS faces U.S. charges
Tuesday July 18, 6:33 am ET
By Pete Harrison
LONDON (Reuters) - Shares in online gaming company BETonSPORTS were suspended on Tuesday after its chief executive was detained in the United States and the FBI ordered four telephone companies to cut off its operations.
ADVERTISEMENT
BETonSPORTS (London:BSS.L - News) said it had been unable to contact Chief Executive David Carruthers, who is being held in Fort Worth, Texas, but had seen a U.S. indictment "alleging various criminal acts against multiple defendants."
The detention of Carruthers is a blow to the $12 billion a year Internet gambling industry. He had spearheaded a campaign against a Republican-written bill to crack down on online gambling.
BETonSPORTS said it was urgently trying to clarify the situation and assess the impact of a temporary restraining order on its business in the United States, its biggest market.
Shares in companies across the sector fell by as much as 19 percent, while some British gaming executives said they were reviewing whether to travel to the United States.
"This comes a week after the extradition of the NatWest Three, and a lot of companies will be looking at their travel plans," said leisure analyst Wayne Brown at Altium Securities, referring to three former British bankers extradited to the United States last week.
The three pleaded not guilty in federal court to fraud charges linked to a deal with defunct energy giant Enron Corp.
The U.S. Department of Justice said on Monday that BETonSPORTS was among 11 individuals and four corporations facing various charges of racketeering, conspiracy and fraud.
The founder of BETonSPORTS.com, Gary Kaplan, 47, was also charged with 20 felony violations, and a warrant has been issued for his arrest, it added.
"BETonSPORTS.COM and other gambling Web sites operated by Gary Kaplan and his co-defendants offered gamblers in the United States illegal wagering on professional and college football and basketball," said a copy of the indictment seen by Reuters.
The Federal Bureau of Investigation (FBI) has instructed four telephone companies to stop providing services to BETonSPORTS, the company said, citing the U.S. Department of Justice.
The United States has also filed a civil case ordering BETonSPORTS to stop taking sports bets there and to return money held by U.S. customers in their gaming accounts. A hearing in the case could be held within 10 days.
Shares in the company fell 15 percent on Monday after U.S. authorities detained Carruthers while he was changing planes in Dallas on Sunday on his way home from Britain to Costa Rica.
The rest of the sector also fell on Tuesday, with Sportingbet (London:SBT.L - News) down 19 percent at 0927 GMT, 888 Plc (London:888.L - News) down 14 percent and PartyGaming (London:PRTY.L - News) down 11 percent. BETandWIN (Vienna:BWIN.VI - News) also fell around 11 percent.
BETonSPORTS faces U.S. charges
Tuesday July 18, 6:33 am ET
By Pete Harrison
LONDON (Reuters) - Shares in online gaming company BETonSPORTS were suspended on Tuesday after its chief executive was detained in the United States and the FBI ordered four telephone companies to cut off its operations.
ADVERTISEMENT
BETonSPORTS (London:BSS.L - News) said it had been unable to contact Chief Executive David Carruthers, who is being held in Fort Worth, Texas, but had seen a U.S. indictment "alleging various criminal acts against multiple defendants."
The detention of Carruthers is a blow to the $12 billion a year Internet gambling industry. He had spearheaded a campaign against a Republican-written bill to crack down on online gambling.
BETonSPORTS said it was urgently trying to clarify the situation and assess the impact of a temporary restraining order on its business in the United States, its biggest market.
Shares in companies across the sector fell by as much as 19 percent, while some British gaming executives said they were reviewing whether to travel to the United States.
"This comes a week after the extradition of the NatWest Three, and a lot of companies will be looking at their travel plans," said leisure analyst Wayne Brown at Altium Securities, referring to three former British bankers extradited to the United States last week.
The three pleaded not guilty in federal court to fraud charges linked to a deal with defunct energy giant Enron Corp.
The U.S. Department of Justice said on Monday that BETonSPORTS was among 11 individuals and four corporations facing various charges of racketeering, conspiracy and fraud.
The founder of BETonSPORTS.com, Gary Kaplan, 47, was also charged with 20 felony violations, and a warrant has been issued for his arrest, it added.
"BETonSPORTS.COM and other gambling Web sites operated by Gary Kaplan and his co-defendants offered gamblers in the United States illegal wagering on professional and college football and basketball," said a copy of the indictment seen by Reuters.
The Federal Bureau of Investigation (FBI) has instructed four telephone companies to stop providing services to BETonSPORTS, the company said, citing the U.S. Department of Justice.
The United States has also filed a civil case ordering BETonSPORTS to stop taking sports bets there and to return money held by U.S. customers in their gaming accounts. A hearing in the case could be held within 10 days.
Shares in the company fell 15 percent on Monday after U.S. authorities detained Carruthers while he was changing planes in Dallas on Sunday on his way home from Britain to Costa Rica.
The rest of the sector also fell on Tuesday, with Sportingbet (London:SBT.L - News) down 19 percent at 0927 GMT, 888 Plc (London:888.L - News) down 14 percent and PartyGaming (London:PRTY.L - News) down 11 percent. BETandWIN (Vienna:BWIN.VI - News) also fell around 11 percent.
Monday, July 10, 2006
Our Senators have decided
what laws are best for other countries to follow. ROFLMAO
Firepay.com is a Canadian company that is not a gambling site. Wire them your money and then from them you can transfer it to anyone of the sportbooks on Dogcrap's list of favorites.
When someone seizes power over another country we call them Dictators and wage war to remove their power over the people.
What is a US Senator that decides he knows what laws are right for a forienge country to follow? A Country that did not elect him?
Looks like it is time to drop the bombs on Virginia to free the Caribbean.
Firepay.com is a Canadian company that is not a gambling site. Wire them your money and then from them you can transfer it to anyone of the sportbooks on Dogcrap's list of favorites.
When someone seizes power over another country we call them Dictators and wage war to remove their power over the people.
What is a US Senator that decides he knows what laws are right for a forienge country to follow? A Country that did not elect him?
Looks like it is time to drop the bombs on Virginia to free the Caribbean.
Those Bastards!!!!!!!!!!!!!!!!!!
Online wagering under attack in Congress
By NANCY ZUCKERBROD, Associated Press Writer
1 hour, 2 minutes ago
WASHINGTON - Gamblers who prefer their laptops to blackjack tables won't like what Congress is doing. On Tuesday, the House plans to vote on a bill that would ban credit cards for paying online bets and could padlock gambling Web sites.
The legislation would clarify existing law to spell out that it is illegal to gamble online.
To enforce that ban, the bill would prohibit credit cards and other payment forms, such as electronic transfers, from being used to settle online wagers. It also would give law enforcement officials the authority to work with Internet providers to block access to gambling Web sites.
Some opponents of the legislation say policing the Internet is impossible, that it would be better to regulate the $12 billion industry and collect taxes from it. The online gambling industry is based almost entirely outside the United States, though about half its customers live in the U.S.
Other critics complain that the bill doesn't cover all forms of gambling. They point to exemptions they say would allow online lotteries and Internet betting on horse racing to flourish.
"If you're going to support legislation that is supposed to 'prohibit gambling,' you should not have carve-outs," said Andrea Lafferty, executive director of the conservative Traditional Values Coalition.
Other conservative and antigambling groups are supporting the legislation, sponsored by Reps. Bob Goodlatte, R-Va., and Jim Leach, R-Iowa.
John Kindt, a business professor at the University of Illinois at Urbana-Champaign who has studied the issue, calls the Internet "the crack cocaine" of gambling.
"There are no needle marks. There's no alcohol on the breath. You just click the mouse and lose your house," he said.
Congress has considered similar bills several times before. In 2000, disgraced lobbyist Jack Ambramoff led a fierce campaign against it on behalf of an online lottery company.
Online lotteries are allowed in the latest bill, largely at the behest of states that increasingly rely on lotteries to augment tax revenues.
Pro-sports leagues also like the bill, arguing that Web wagering could hurt the integrity of their sports.
The horse racing industry also supports the bill because of the exemption it would get. Betting operators would not be prohibited from any activity allowed under the Internet Horseracing Act. That law written in the 1970s set up rules for interstate betting on racing. It was updated a few years ago to clarify that betting on horse racing over the Internet is allowed.
Greg Avioli, chief executive officer of the National Thoroughbred Racing Association, said the mention of horse racing in the bill is "a recognition of existing federal law," not a new carve-out.
He said the racing industry has a strong future in the digital age and acknowledged the bill would send Internet gamblers to racing sites. "They'd return to the one place they can bet legally," Avioli said.
That's what some critics say is unfair.
"Somehow we find ourselves in a situation where Congress has gotten in the business of cherry-picking types of gambling," complained Rep. Robert Wexler (news, bio, voting record), D-Fla. Wexler had tried unsuccessfully to include exemptions for dog racing and jai alai, both popular in Florida.
The Justice Department has taken a different view on the legality of Internet betting on horse races. In a World Trade Organization case involving Antigua, the department said online betting on horse racing remains illegal under the 1961 Wire Act despite the existence of the more recently passed Interstate Horseracing Act.
The department hasn't actively enforced its stance, but observers say it is possible the agency and the racing industry could face off in court in the future.
Sen. Jon Kyl (news, bio, voting record), R-Ariz., is leading support for the ban in the Senate. The issue has so far not been debated in that chamber this year.
By NANCY ZUCKERBROD, Associated Press Writer
1 hour, 2 minutes ago
WASHINGTON - Gamblers who prefer their laptops to blackjack tables won't like what Congress is doing. On Tuesday, the House plans to vote on a bill that would ban credit cards for paying online bets and could padlock gambling Web sites.
The legislation would clarify existing law to spell out that it is illegal to gamble online.
To enforce that ban, the bill would prohibit credit cards and other payment forms, such as electronic transfers, from being used to settle online wagers. It also would give law enforcement officials the authority to work with Internet providers to block access to gambling Web sites.
Some opponents of the legislation say policing the Internet is impossible, that it would be better to regulate the $12 billion industry and collect taxes from it. The online gambling industry is based almost entirely outside the United States, though about half its customers live in the U.S.
Other critics complain that the bill doesn't cover all forms of gambling. They point to exemptions they say would allow online lotteries and Internet betting on horse racing to flourish.
"If you're going to support legislation that is supposed to 'prohibit gambling,' you should not have carve-outs," said Andrea Lafferty, executive director of the conservative Traditional Values Coalition.
Other conservative and antigambling groups are supporting the legislation, sponsored by Reps. Bob Goodlatte, R-Va., and Jim Leach, R-Iowa.
John Kindt, a business professor at the University of Illinois at Urbana-Champaign who has studied the issue, calls the Internet "the crack cocaine" of gambling.
"There are no needle marks. There's no alcohol on the breath. You just click the mouse and lose your house," he said.
Congress has considered similar bills several times before. In 2000, disgraced lobbyist Jack Ambramoff led a fierce campaign against it on behalf of an online lottery company.
Online lotteries are allowed in the latest bill, largely at the behest of states that increasingly rely on lotteries to augment tax revenues.
Pro-sports leagues also like the bill, arguing that Web wagering could hurt the integrity of their sports.
The horse racing industry also supports the bill because of the exemption it would get. Betting operators would not be prohibited from any activity allowed under the Internet Horseracing Act. That law written in the 1970s set up rules for interstate betting on racing. It was updated a few years ago to clarify that betting on horse racing over the Internet is allowed.
Greg Avioli, chief executive officer of the National Thoroughbred Racing Association, said the mention of horse racing in the bill is "a recognition of existing federal law," not a new carve-out.
He said the racing industry has a strong future in the digital age and acknowledged the bill would send Internet gamblers to racing sites. "They'd return to the one place they can bet legally," Avioli said.
That's what some critics say is unfair.
"Somehow we find ourselves in a situation where Congress has gotten in the business of cherry-picking types of gambling," complained Rep. Robert Wexler (news, bio, voting record), D-Fla. Wexler had tried unsuccessfully to include exemptions for dog racing and jai alai, both popular in Florida.
The Justice Department has taken a different view on the legality of Internet betting on horse races. In a World Trade Organization case involving Antigua, the department said online betting on horse racing remains illegal under the 1961 Wire Act despite the existence of the more recently passed Interstate Horseracing Act.
The department hasn't actively enforced its stance, but observers say it is possible the agency and the racing industry could face off in court in the future.
Sen. Jon Kyl (news, bio, voting record), R-Ariz., is leading support for the ban in the Senate. The issue has so far not been debated in that chamber this year.
Friday, July 07, 2006
Las Vegas
Back from Vegas.
The Golden Gate was a great place to stay. It's the oldest hotel in Vegas. The Casino is absolutely beautiful. But sadly it is the first of the 6 deck tables to show up in downtown Vegas. We can only pray this is not for shadowing the things to come. And even sadder. My ole home - the Gold Spike no longer evens deals black jack. Just what the world needs - more slots :(
But there are still plenty of single and double deck tables left downtown. Turned $3,000 into $6,000 and then watched as it crashed to $3,300. But I figure to be paid $300 to eat steak and shrimp every day ain't bad.
I did checkout the strip. Was pleasantly surprise t see me favorite casino on the strip - the Sahara had double deck blackjack. But I still say Fremont Street is the only way to go.
Going back over Labor day weekend. Will be trying out the 4 Queens Casino.
Subscribe to Posts [Atom]