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Last Updated: Tuesday, 18 July 2006, 09:48 GMT 10:48 UK
Q&A: Gambling in the spotlight
Poker chips and playing cards
Online poker has boomed in popularity in recent years
Gambling has hit the news in a big way this week with huge issues under the spotlight in the US and the UK. At the same time shares in online gambling firms have seen their stocks come under pressure

Why is gambling in the news so much at the moment?

Where do you start? Over in the US the authorities appear have launched a full frontal legal assault on internet gambling.

On Monday they detained David Carruthers, the British chief executive of the online gaming site Betonsports, and issued an indictment "alleging various criminal acts against multiple defendants".

In the UK, shares in online gambling firms slumped as the gravity of the accusations against Betonsports - which has had its shares suspended - emerged.

Meanwhile, the UK government, under proposed new laws due to be published, is set to approve television adverts from 2007 for casinos, betting shops and gambling websites.

The government has already approved an expansion of gambling, through the licensing of new 'super-casinos'.

This was recently in the news when it emerged that Deputy Prime Minister John Prescott had visited the ranch of US billionaire Philip Anschutz, who has bought the Millennium Dome and hopes to turn it into a super-casino.

What is the latest situation in the US?

Mr Carruthers and ten other individuals are charged with racketeering - running an illegal activity to make money.

According to the Department of Justice, internet gambling is illegal in the US, and Mr Carruthers has been mounting a campaign to get it legalised.

Some states have passed laws prohibiting online gambling, but no federal laws specifically address it.

Instead, the federal government relies primarily on the Wire Wager Act to prosecute online casino operators.

Under the act, business owners who accept bets via a "wire communication facility" face fines and imprisonment. The act was intended to curb the use of the telephone to accept bets.

A warrant has also been issued for the arrest of Betonsports founder Gary Stephen Kaplan, 47.

He is alleged to have failed to pay federal wagering excise taxes.

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.

What does the Department of Justice indictment say?

A US grand jury had filed charges of "racketeering, conspiracy and fraud" in a case involving 11 individuals and the company.

The 22-count indictment was accompanied by a temporary restraining order requiring Betonsports to stop taking sports bets from the US.

A hearing on the civil matter will take place within 10 days.

US attorney Catherine Hanaway said the case concerned "illegal commercial gambling across state and international borders".

She added: "Misuse of the internet to violate the law can ultimately only serve to harm legitimate businesses.

"This indictment is but one step in a series of actions designed to punish and seize the profits of individuals who disregard federal and state laws."

What has happened to UK-listed internet gambling shares?

Investors fears that the US move marks the start of a broader crackdown on internet gambling.

Many of the UK online gaming companies have substantial overseas markets.

In early trading on Tuesday, PartyGaming lost 7% having shed 5.5% on Monday.

Sportingbet lost 10%, 888 Holdings fell 8% and Empire Online lost 5.3%.

Betonsports shares had plunged, 24.5 pence, 16.6%, on Monday before they were suspended early on Tuesday.

How will this affect the UK government plans?

It hardly paints gambling in a flattering light on the day the government is set to unveil its shake-up of gambling advertising in the UK.

These guidelines follow the passing of the Gambling Act last year, which gave operators greater scope to advertise.

There would also be a ban under the new rules on claims that gambling can solve financial problems.

A public consultation on these guidelines will be launched later on Tuesday and the finalised regulations will take effect in 2007 when the Gambling Act comes into force.

Under the proposed rules, gambling adverts must not link gambling to seduction, sexual success or "enhanced attractiveness".

Why does the government want to change the guidelines?

The government argues that current guidelines were drawn up before the boom in online gambling, and need to be updated.

The UK online gambling industry made 5.2bn in 2005, and is forecast to grow by 22% this year.

The scale of growth in online betting was one of the driving forces behind the Gambling Act, which comes into force in 2007.

The Gambling Commission is the new regulatory body for the industry.

However critics say the government is not doing enough to control gambling and organisations like the Salvation Army claim there is an increase in problem gambling.


SEE ALSO
US arrest hits web gaming shares
17 Jul 06 |  Business
Shadow cast on Partygaming sale
16 Jun 05 |  Business
Poker firm bets on 5bn flotation
02 Jun 05 |  Business
WTO rules against US gambling ban
11 Nov 04 |  Business

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