A federal grand jury in Missouri has issued a 22-count indictment on BetonSports chief executive, David Carruthers, 10 other individuals and 4 corporations on charges that include conspiracy, fraud and racketeering. Mr Carruthers was arrested yesterday by federal authorities when travelling to Costa Rica from Britain via a US airport. The news caused a further shudder in share prices for listed online gambling companies, already volatile in the wake of moves in the United States to outlaw online gambling. Gary Kaplan, BetonSports’ founder, is also charged and a warrant has been issued for his arrest.

In March this year David Carruthers wrote an article criticising the US government’s attempts to curtail online gambling. He commented that passing new legislation, or enforcing the outdated Wire Act, ‘would be foolish at best and a violation of privacy and individual freedom at worst,’ and recommends that the US government faces facts and licences and regulates online gambling. Last week he said that the bill passed by the House to crackdown on Internet betting would be bound to fail. These opinions will not have endeared him to the US authorities.

In January BetonSports announced that its CEO would spearhead the creation of an independent Advisory Council to deal with the social, economic and public concerns surrounding regulation of the online gambling industry in the United States. At the same time the company also released a White Paper on the Internet gambling industry and the reasons for regulation in the United States. David Carruthers is now in custody in Texas and expected to be sent to Missouri for trial. Prosecutors have yet to release details of the multi-count indictment although, as IRS agents were involved along with the FBI, tax evasion may be an issue.

At the Global Interactive Gaming Summit & Expo (GIGSE) in Toronto this May, David Carruthers was confident that measures taken by the Department of Justice could be overcome and that the online gambling industry would continue to flourish. A standing ovation followed his comments given as a panel member discussing the advertising crisis in the United States. As CEO of BetonSports, Carruthers said he intended to spend more on advertising this year than the previous year, and suggested tactics to push the product. It now appears that the federal government is developing its own tactics and David Carruthers may yet reconsider his parting shot – ‘What crisis?’ (E-07.18.06)

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