BetonSports CEO detained in US

Shares in online gambling groups dived on Monday after David Carruthers, the chief executive of Costa Rica-based, UK-listed BetonSports was detained in the US.

Shares in the online gaming group fell 18.4 per cent to 120p by mid-afternoon, 888 Holdings shares were down 4 per cent at 192p, Sportingbet fell 12.9 per cent to 282½p while the largest of the online poker groups, PartyGaming saw its shares fall 4.1 per cent to 104½p.

Betonsports said no one from the company had been able to talk to Mr Carruthers since his detention on Sunday night.

Mr Carruthers and his wife were en route from the UK to the BetonSports headquarters in Costa Rica when federal authorities approached Mr Carruthers in the transit lounge of the Dallas International Airport.

His wife, who was said to be shaken by the experience, was allowed to continue the flight to Costa Rica.

The board is currently seeking clarification as to the basis of the detention and it said a further announcement will be made when appropriate.

A spokeswoman for the company was unable to give further details.

'David has not had any contact with the outside world. All we know is that he was detained. Why he was detained we don't know and I would not want to speculate,' she said.

It is not known why Mr. Carruthers was singled out for questioning.  Another high profile online gambling CEO, Calvin Ayre, has been traveling in and out of the US over this past week.  Ayre traveled to New York via Costa Rica without incident Thursday.  Neither Ayre or Carruthers are US citizens. 

Analysts were at a loss to explain the developments. Speculation has risen that the US Department of Justice might have a "beef" with BetonSports for various reasons that may even stem as far back to the company's original founder or interests in another entity acquired by the company, the VO-Group.

The VO-Group on its website solicits business for agents, which the US Justice Department has stressed is an absolute "No No".

Gambling911.com has been advised not to accept advertising for this type of business enterprise since it is said to foster "illicit: activity on US soil. 

Other internet gaming companies whose share prices have been affected by the detention of Mr Carruthers, including PartyGaming, had been in contact with BetonSports seeking information.

Mr Carruthers was in the UK for last Friday's BetonSports annual meeting.

Online gambling has mushroomed into a $12bn worldwide industry. Half of the revenues are made in the US, but none of the world's 2,500 gambling sites are based there. The 1961 Interstate Wire Act bans gambling over the telephone and, according to the Department of Justice, over the internet as well, although this has not been tested in court.

Last week, the House of Representatives voted to criminalise electronic payment to gambling sites whether by credit card, wire transfer, debit or "e-wallet".

The Goodlatte/Leach bill makes it illegal for US financial institutions to transfer money to offshore gambling websites or to the online payment services those sites use. But it allows online bets on horse races, as well as internet-based state lotteries.

Last week, Mr Carruthers, a leading lobbyist for the gaming industry in the US, said the Senate had no appetite to discuss the bill. He added that the debate on internet gambling was moving in the company's favour, and that he thought improved transparency would lead to legislation in three to five years.

News obtained by the The Financial Times was used for this report.

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Gambling911.com News Wire

Originally published July 17, 2006 11:41 am EDT