BetOnSports CEO Detained in US

David Carruthers, chief executive of online gaming company BetOnSports PLC, was arrested at Dallas-Fort Worth Airport Monday while transferring planes on his way down to Costa Rica, where the company has operations facilities. Ten other people and three other companies were indicted by the U.S. Justice Department.

At the time of Carruthers’ arrest, it was not clear what the charges were, but later in the day, it was announced that he and the others were charged with racketeering, conspiracy and fraud. In addition to Carruthers, the founder of BetOnSports, Gary Stephen Kaplan, was charged with twenty different felonies. The major charge against Kaplan is the reported failure to pay federal excise taxes on $3.3 billion in wagers from U.S. customers. The indictment is calling for the company and the other defendants to fork over a total of $4.5 billion.

The firm’s stock, which is traded on the London Stock Exchange, plummeted 17.5 percent on the news. Other online gambling companies felt the effects, too. PartyGaming shares fell almost 7 percent, 888 Holdings was down 4 percent, and Sportingbet took more than a 12 percent hit.

BetOnSports has been slapped with a temporary restraining order, preventing it from taking bets from U.S. customers. This will, in effect, shutdown the company, as it is estimated that as much as 90 percent of the bets placed on its site come from the States.

Said U.S. Attorney Catherine L. Hanaway, “Illegal commercial gambling across state and international borders is a crime.”

Originally published July 17, 2006