Gaming boss due US bail hearing

Mr Carruthers' arrest has forced a re-evaluation of the industry

An online gambling firm chief held in the US for racketeering is due for a bail hearing later on Friday.

David Carruthers, 48, was detained on Monday after he was named in a 22-count indictment covering racketeering and other charges.

The charge sheet, which names 11 people and four businesses, relate to the illegal taking of bets from US residents and failure to pay taxes.

The arrest and indictment have sent shockwaves through the gaming industry.

'The need for regulation'

Many of the companies offering online games such as Betonsports, and rivals including Partygaming and 888, make large amounts of their sales in the US.

The industry estimates that there are 1.2 million online gamblers worldwide, helping generate $12bn ($6.4bn) in annual business.

While it has been illegal to take bets on sporting events in the US, many analysts and companies expected regulators would allow firms to meet strong consumer demand for games like poker and let them operate in a grey area.

However, many observers now expect the US to continue in its crackdown and some are even predicting that there may be growing support for an anti-gaming bill.

"If they can portray online gambling as full of crooks, then that will reinforce the need for regulation," said Clive Hawkswood of the Remote Gambling Association.

"Given the mood, that is more likely to be prohibition rather than legitimisation," the London-based analysts said.

Gaming companies looked to play down the threat to their business, and many analysts said that that while the charges came as a shock, they were company specific and did not necessarily sound the death knell for the industry.

Mr Carruthers, the chief executive of Betonsports, is due in court later on Friday afternoon.

Hopeful

Earlier this week his Texas-based lawyer, Tim Evans, said that he was hopeful about securing bail for the executive.

"The government has asked the judge to detain him until such a time as a trial can be had, which will be months away, so we are very interested in getting a court order that allows him to be released," Mr Evans explained.

Betonsports has shut down its website following the arrest of Mr Carruthers, and the company's shares, which are listed in the UK, have been suspended.

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

He and his wife, who have lived in Costa Rica since 2000, were returning from the company's annual meeting in London when he was detained in Dallas.

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