Gaming Law International

Online Gambling CEO Detained in USA

David Carruthers, the CEO of the online gambling company, BetonSports Plc, was detained last night by US authorities while changing flights in the US en route from the UK to Costa Rica. He is being held in Fort Worth, Texas, along with four others. The US Department of Justice apparently released a statement saying that a grand jury in Missouri returned a 22-count indictment charging 11 individuals and four corporations, including BetonSports Plc and three companies based in Florida, on various charges of racketeering, conspiracy, tax evasion and fraud. The indictment was returned by the grand jury on June 1, 2006 but was kept under seal because many of the defendants were offshore.

The United States has also filed a civil complaint to obtain an order requiring BetonSports Plc to stop taking sports bets from the US and to return money held in wagering accounts to account holders in the US. To view the press release from the Department of Justice explaining the indictment, Download here.pdf.

ABC News has the latest here.

HR-4411 -- US Anti-online Gambling Bill Approved by the House

Today, the US House of Representative approved the anti-online gambling bill (H.R. 4411, short-titled the Unlawful Internet Gambling Enforcement Act ). The bill now moves to the Senate for consideration and if approved, would amend the United States Code by prohibiting the use of any financial instrument for unlawful online gambling. Criminal convictions under the bill carry a five-year term of imprisonment or a fine, or both. The bill also requires the US government to advance policies that promote the cooperation of foreign governments in the enforcement of the bill.

US House of Representatives to Vote on Anti-Online Gambling Bill

The US House of Representatives will vote today on a proposed bill designed to prohibit online gambling in the U.S. and prevent financial transactions with offshore online gambling sites. The bill combines two measures sponsored by Republican Representatives James Leach of Iowa and Bob Goodlatte of Virginia. The bill would exempt online gambling involving horse racing (pari-mutuel betting) and state lotteries. If approved, the bill will go to the Senate for consideration.

The crux of the bill is a set of provisions designed to prevent the use of credit cards and other financial instruments for online gambling by making it unlawful for financial intermediaries to process payments for online-gaming businesses. The bill requires financial intermediaries and web service providers to cooperate with American law enforcement agencies to restrict online gambling.

Enforcement with financial intermediaries will take at least two forms: (a) on the prevention side, financial intermediaries, such as credit card companies, will have to identify which of their merchants are involved in online gambling activities involving US based cardholders. Once they have identified those merchants, the relevant merchant account numbers used to process credit card authorizations will be restricted. This means that a gambling transaction will simply not be authorized. The prohibitions should not affect credit cards issued outside the US; (b) on the deterrence side, credit card issuers will likely be asked or compelled to provide transaction records for the merchants identified as providing online gambling services. Transaction records will show the credit card numbers that were used to gamble online, allowing an investigating authority to then obtain from the credit card issuers, the names and addresses of credit card holders who gambled online. This information will likely be used for prosecution purposes.

There are significant privacy concerns, national and international, that arise with legislative attempts to control online conduct. Those concerns should be addressed concurrently with measures intended to compel production of personal information.

As the bill is being considered at the House of Representatives, some of the largest US gaming companies, such as MGM Mirage and Harrah's Entertainment Inc., are lobbying Congress to consider whether online gaming should be legalized in the US.

British Book-keeper Took $2 million From Employer to Gamble Online

Another case of employee theft to fuel a gambling addiction - in Britain today 23-year-old Bryan Benjafield pleaded guilty in Dorchester Crown Court to stealing more than $2 million CDN from his employer to gamble online. Benjafield's employer, Charminster Limited, was forced into administration as a result of the theft.  The court will consider sentencing in a few weeks time.

Story here. Update here.

New Jersey Casinos Re-Open

New Jersey's 12 casinos were back in operation early this morning after Gov. Jon Corzine signed a $30 billion compromise spending plan last night, formally ending the state's budget impasse. Read more here.     (Photo From AP)

World Cup Gambling Rings Busted in China

According to the China Post, over the past few weeks, Chinese police have raided nine groups in Beijing and in the southwest of China and arrested 77 people alleged to have participated in Internet-based gambling rings that took millions of dollars worth of World Cup bets from thousands of gamblers. One of the gambling rings in Chengdu, a city in the southwest, apparently handled USD $120 million in bets.

PartyGaming Executives Cash Out

PartyGaming Plc filed notice yesterday that three of its directors/senior management were selling their shares in the Company. The sale follows closely on the heels of a share sale a few weeks ago by PartyGaming founders Ruth Parasol, Russ DeLeon, Anurag Dikshit and Vikrant Bhargava of 200 million shares (5% of the issued and outstanding shares). Yesterday's share sale was as follows:

• General Counsel & Secretary David Abdoo sold his entire shareholdings of 1.71 million shares for approximately $3.6 million USD;
• Finance Director Martin Weigold sold his entire shareholdings of 2.74 million shares for approximately $5.8 million USD; and
• Chairman Michael Jackson sold 262,069 shares (less than a third of his shareholdings) for approximately $558,776 USD.

Chairman Jackson was quoted as saying that there was nothing sinister in his share disposition yesterday and that he sold shares to deal with personal tax issues. Nevertheless, the disposal by the Company's in-house lawyer and finance director of their entire shareholdings appears to have raised concern among some shareholders who sold shares following yesterday's news of the share sale. The Company is scheduled to file a trading statement for second quarter on July 21, 2006.

Atlantic City Casinos Shut Down

The second-largest gambling market in the US is in a virtual shut-down today after New Jersey Governor Jon Corzine, facing a budget impasse, deemed the 190 gambling inspectors who are required by law to monitor casino operations "non-essential'' state employees. Last week, several New Jersey casinos lost an appeal seeking to block the closures of the casinos. The shut-down is expected to cost New Jersey's 12 casinos an estimated $16 million in lost gambling revenue per day and leave 15,000 state casino employees out of work.

The full report can be read at ABC News online.

Two Gamblers Can't Collect $209,000 Slot Machine Win

Two men in Manitoba who won $209,000 playing the slots at a Winnipeg casino are being told by the Manitoba Lotteries Corporation that they cannot collect their win because a software error caused the slot machine to register an incorrect amount. The players are contemplating suing the Manitoba Lotteries Corporation over the issue. You can read the story here on the CBC News. A similar situation occurred several months ago when a lawyer in South Africa won $7.9 million from a slot machine but could not collect her winnings from the KwaZulu-Natal Gambling Board because of an apparent slot machine malfunction. You can read that earlier post on Gaming Law International here.

PartyGaming Plc to Acquire Gamebookers

According to Reuters, PartyGaming Plc is contemplating an acquisition of on-line bookmaker Gamebookers.