Sportingbet Chairman Arrested at New York Airport

Peter Dicks, non-executive chairman of London Stock Exchange-listed online gambling company Sportingbet Plc, was arrested late Wednesday night upon entering Kennedy International Airport. Little is known of the situation surrounding Dicks' arrest except that he was apprehended by order of a warrant issued by the state of Louisiana in relation to an investigation of illegal gambling activity dating to May of 2006.

Aside from halting the trading of its shares on the London Stock Exchange and stating that Dicks was scheduled for a hearing at 9 a.m. EST Thursday morning, Sportingbet has declined further comment on the matter.

Dicks is the second executive of a British online gambling firm to be arrested in the U.S. this summer. On July 16 David Carruthers, CEO of BetonSports was arrested while switching flights at Dallas Fort Worth International Airport.

As was the case immediately following the arrest of Carruthers, the arrest of Dicks has sent I-gaming stocks on the London Stock Exchange plunging as investors and the online gambling industry in general struggle to come to grips with the hazardous conditions of their market.

To most online gambling industry participants the two arrests are evidence of a massive crackdown on Internet gambling in the U.S. It may, however, be too early to assume that the two cases are directly related. While the arrest of Carruthers was the result of a Justice Department indictment, Dicks was apprehended by order of the Louisiana State Police Gaming Enforcement Division.

The Department of Justice has for years insisted that online gambling is a violation of the Federal Wire Act, but until the arrest of Carruthers in July companies have been able to operate in foreign-regulated jurisdictions without redress. Many lawyers and industry analysts had speculated that the indictment against BetonSports and its executives was an insolated incident because the company's founder Gary Kaplan allegedly engaged in illegal bookmaking activities in New York before he started the company.

Sources indicate that the federal government was not aware of the Louisiana investigation into Sportingbet however. Louisiana happens to be one of a handful of states that have actually passed legislation prohibiting unauthorized gambling over the Internet. Considering the recent arrest of Carruthers and the fact that a federal prohibition bill awaits a hearing before the U.S., the Louisiana State Police Gaming Enforcement Division may have found the current environment an opportune time to launch action of its own. It also seems plausible that Sportingbet may not be the only online gambling company under investigation by the Gaming Enforcement Division.

Lawrence Walters, an attorney specializing in Internet gambling law, expects that the state of Louisiana may have a difficult time in getting its Internet gaming law upheld in court because the activity takes place across state lines and therefore falls under the authority of the federal government.

"State law cannot be applied constitutionally to Internet transactions given the Commerce Clause," Walters told the New York Times.

"It would be a substantial and costly effort to have 50 lawyers in 50 states," he added.

Regardless of what U.S. law enforcement agency may be responsible for Dicks' arrest, one thing should remain clear: Online gambling executives risk arrest if they travel to the U.S.