arrest and bill won’t deter online casinos
According to a
recent online casinos news report out of California, the recent
arrest of a high-profile online casinos executive and a federal
bill outlawing online casinos are generating headlines but will
do little to curb the multibillion-dollar online casinos
industry, online casinos experts say.
Former online casinos CEO David Carruthers is scheduled to
appear in a St. Louis federal court Monday. He and his online
casinos company are charged with mail and wire fraud and money
His arrest in Dallas last month initially drove down shares of
offshore operations such as those of the top online casinos
being traded on the London Stock Exchange. It follows an
indictment of another online casinos executive and an anti
online casinos bill in Congress. Online casinos experts say it
does not signal a crackdown, as more online casinos emerge for
poker players and sports fans, and online casinos stocks creep
"One down, another 2,299 (gaming) sites to go," says Joseph
Kelly, an online gaming expert who is a professor at SUNY
The firm, which was delisted from the London Stock Exchange, has
fired Carruthers and vowed to press on outside the USA.
The Wire Act of 1961 makes it illegal to bet online. But the law
is nearly impossible to enforce, and nearly 80 countries allow
wagers online. The $12 billion industry is expected to soar to
$24.5 billion by 2010, says researcher Christiansen Capital
Because the firm is a regulated UK firm, the U.S. government can
do little, says Ken Dreifach, an Internet lawyer who once worked
for New York state Attorney General Eliot Spitzer.
The Justice Department is "as vigilant as ever," spokeswoman
Jackie Lesch says.
Yet arrests are rare. The only person convicted on federal
charges of running an illegal offshore Internet gambling
operation was Jay Cohen of World Sports Exchange. He served more
than a year in a federal prison. The company is still in
William Scott, operator of Worldwide Telesports, was indicted on
money-laundering charges in May but has not been caught.
Carruthers became a target for several reasons. The firm
advertised on billboards in the USA — a violation of federal
law. He often traveled in the USA. And his former employer took
bets on an 800-number from Americans, say Dreifach and Kelly.
The outspoken Carruthers is out on bail — $1 million in cash —
and living in St. Louis, says his lawyer, Scott Rosenblum.
When government officials pursue cases, it is invariably against
sports sites. Sports bets are specifically barred by the 1961
law. The only American convicted of gambling online, Jeffrey
Trauman, of North Dakota, paid a $500 fine.
Still, some gambling experts, such as Michael Tew, a principal
at consultant CapitalHQ, say Carruthers' arrest underscores a
systematic U.S. crackdown. The House recently passed a bill that
would restrict the ability of U.S. financial institutions to
The net gambling industry remains controversial and much more is