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British Online Gaming Executive Is Arrested
By Michael A. Hiltzik, Times Staff Writer
7:11 PM PDT, September 7, 2006

In an action that roiled the fast-growing world of online gambling, a top executive of a British Internet company was arrested on U.S. soil late Wednesday on charges connected with taking wagers from bettors in the United States.

It was the second arrest in two months of a foreign Internet-gaming executive in the United States.

Wednesday, Peter Dicks, 64, chairman of London-based Sportingbet PLC, was taken into custody by airport police at New York's John F. Kennedy International Airport after he arrived on an overseas flight. He was held on a criminal warrant issued by the state of Louisiana. After the arrest, Sportingbet asked the London Stock Exchange, where its stock is listed, to halt trading in its shares.

The Dicks arrest follows the July 17 arrest of David Carruthers, chief executive of BetOnSports.com, another online sports book. Carruthers was on a layover at Dallas-Fort Worth Airport between Costa Rica and Great Britain when he was taken into custody on federal charges including racketeering and mail fraud. He is under house arrest in a St. Louis suburb and awaiting trial early next year. The company discharged Carruthers and has shut down its U.S. operation. Its future remains in doubt.

While it is not illegal under U.S. law for Americans to make online bets, federal prosecutors maintain that it is illegal for online operators to solicit or accept them, even when their operations are located offshore.

Experts in gambling law said the two arrests underscored an intensified government attack on Internet gambling at a time when the online customer base is expanding rapidly worldwide and the technology to mask the source and destination of wagers is improving. The online gambling market is estimated at more than $11 billion annually and is projected to reach $25 billion by 2010. More than half of that is estimated to come from bettors in the United States.

Whether the government can shut down all Americans' access to such gambling is questionable, said I. Nelson Rose, a gaming law expert at Whittier Law School in California. "It's pretty clear you can't prevent it completely -- the Internet was designed to survive a nuclear war."

The law governing online betting in the United States, meanwhile, is in flux: In June, the House of Representatives passed a measure by Reps. Robert W. Goodlatte, R.-Va., and James Leach, R-Iowa, to prohibit banks and other financial service companies from passing payments to Internet wagering sites, even by check. A companion bill has been stalled in the Senate.

Experts -- and judges -- are divided over how existing laws apply to offshore Web sites such as those operated by BetOnSports and Sportingbet. The 1961 federal Wire Act specifically outlawed bets made using the national communications network -- principally via telephone -- on sporting events. Although at least one federal appeals court has ruled that the prohibition applies to Internet sports betting, some lawyers say that the law may someday be found to be inapplicable to Internet technologies that circumvent telephone networks entirely.

Dicks is charged with violating a Louisiana state law prohibiting computer gambling -- one of few such state laws in the country -- carrying a maximum sentence of five years in jail and a $25,000 fine, according to Senior Trooper Dwight Robinette, a spokesman for the state police. Robinette said the federal government was not involved in the prosecution. "It is our case," he said.