[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Tuesday, 18 July 2006, 16:34 GMT 17:34 UK
Gaming shares hit by US charges
Poker chips and playing cards
The online gaming sector has been hit hard by the US arrest
Shares in UK-listed online gambling companies have sunk after the boss of gaming firm Betonsports was detained in the US on charges of racketeering.

Betonsports' chief executive David Carruthers was named in an indictment in Missouri after an investigation into online gaming.

Trading in Betonsports shares has been suspended. Rivals saw their stocks fall as the gravity of the charges emerged.

Partygaming shares closed down 17% and 888 Holdings dropped by 13%.

Meanwhile smaller company Sportingbet lost 35% of its share value.

Betonsport's shares had plunged by 16.6% on Monday and were suspended before trading began on Tuesday.

Warrant

The 22-count indictment issued by a federal grand jury action came after US investigators used assumed identities to gamble on the site.

READ THE INDICTMENT

Most computers will open this document automatically, but you may need Adobe Reader

Mr Carruthers, 48, was travelling to Costa Rica when federal authorities arrested him at Dallas airport as he changed planes.

The indictment charges 11 individuals and four businesses including Costa-Rica based Betonsports.

A warrant has been issued for the arrest of Betonsports founder Gary Stephen Kaplan, 47, who is charged with 20 offences including tax evasion and conspiracy.

The US has also filed a civil action, ordering the firm to stop taking any further bets from the US and to return money held in betting accounts of US-based customers - though Betonsports said it was unaware of the order.

US attorney Catherine Hanaway of the Eastern District of Missouri said the indictment was part of a crackdown designed to "punish and seize the profits" of those illegally running gaming sites.

"Illegal commercial gambling across state and international borders is a crime," she said.

Attacked ban

Betonsports, whose holding company Betonsports plc is listed on London's Alternative Investment Market, is based outside of the US because of strict gaming laws there.

Mr Carruthers has been an outspoken opponent against a proposed US law banning banks and credit card companies from processing internet gambling payments.

Despite the bill winning the backing of the House of Representatives last week, he said the move would fail due to a backlog of US legislation.

The firm said the arrest had come as a complete surprise and that Betonsports had received no indications of any legal problems.

It added that the business would continue to trade normally.

"In particular, the Antigua-licenced gaming activities serviced in Costa Rica and Kuala Lumpur are operating as usual," it said.

Online boomtime

Mr Carruthers and his wife have lived in Costa Rica since 2000 and were returning from the company's annual meeting (AGM) in London.

Betonsports is just one of the companies cashing in on an internet betting boom and has 1.2 million customers worldwide, many of them in the US where online gaming is a $12bn-a-year business that is expanding.

This is despite the government's opinion that it violates a law against placing interstate bets using telephone lines.

This motivated the Congressional action.

Four million people gamble online in the UK every month and the sector is forecast to grow by 22% this year.

However, the huge rise in online bets has been blamed for a parallel increase in the number of people seeking help for gambling addiction.


VIDEO AND AUDIO NEWS
Hear about the charges against David Carruthers



SEE ALSO
US arrest hits web gaming shares
17 Jul 06 |  Business
Partygaming takes care of 'skins'
11 Nov 05 |  Business

RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites



FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

PRODUCTS & SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific