Pressure mounts on Internet gambling firms

updated 3:14 p.m. ET Sept. 8, 2006

ST. LOUIS - Gambling industry experts agree: If you operate an offshore gaming Web site, stay out of the U.S.

Moments after stepping foot on American soil Thursday, Sportingbet PLC Chairman Peter Dicks became the second British offshore sports betting executive arrested in recent months for illegal online gambling in the U.S. Former BetOnSports PLC Chief Executive Officer David Carruthers was arrested on federal charges in July.

It’s still unclear if the arrest is a coincidence or part of a government crackdown, but some experts suspect the latter.

And as millions of dollars in bets for the NFL’s opening weekend roll into thousands of Web sites, the pressure on the Internet gaming industry has intensified.

“You don’t need legal expertise to know if you are running an offshore gambling site, don’t come to America right now. You stand a good chance of being arrested,” Internet gambling expert and lawyer Nelson Rose said.

Dicks, 64, was arrested at Kennedy International Airport in New York after flying from London, where his Web sites operate legally and are traded on the London Stock Exchange. More than $1.5 billion shares in the company were suspended by the LSE at Sportingbet’s request Thursday.

Dicks was detained on a Louisiana state warrant from May for gambling by computer, a felony punishable by up to five years year in prison and a $25,000 fine. Similar warrants have been issued for other Sportingbet associates, but authorities would not release information on who or how many of them are wanted.

Seven states have laws prohibiting Internet gambling. The arrest of Dicks marked the first time one of those states has taken action against one of thousands of big-time online gambling operations. Millions of American players bet an estimated $6 billion per year online, according to industry figures.

Carruthers was detained at a Dallas airport July 16 on federal charges from the U.S. Attorney’s office in St. Louis crafted around the 1961 Wire Act. The federal law bans sports bets over the phone (or in this case the Internet), even if the business is overseas.

Cases against offshore betting companies are extremely difficult to prosecute because of the many gray areas — including poker and casino games — in the current law that U.S. lawmakers hope to clear up, Rose said.

“Prosecutors are looking for easy cases,” said Rose, a professor at the Whittier College of Law in California. “It has to be sports betting, it has to be one that takes bets by phone and they have to physically be able to catch them. That’s the hard part.”

The founder and chief executive of the Internet casino Bodog.com, Calvin Ayre, was not surprised by the recent arrest. The Canadian Internet gambling mogul questioned why an online gambling executive that accepts illegal wagers from U.S. customers would come to America in such a risky climate.

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