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Emily D. Swoboda
 

Surveying the BoS Aftermath

26 July 2006

The I-gaming industry is gradually reacting to the shocking arrest of BetonSports' now former CEO David Carruthers on July 16 in Dallas.

Carruthers and 10 others, including BoS founder Gary Kaplan, were indicted on July 17 on charges of racketeering, fraud and money laundering in connection with taking bets from the United States over the Internet. Kaplan is also charged with tax evasion.

In the aftermath of the arrests, some of the industry's leaders are speaking up about the arrests and their impact on their companies, as well as on the industry in general.

Bodog CEO Calvin Ayre said the arrests have increased Bodog's business, with some of its players migrating over after BoS shut down its site on Wednesday in compliance with the Department of Justice's restraining order.

Bodog is a privately held company, to which Ayre credits the company's integrity. He said for this reason, Bodog should not have to change its business model as a result of the arrests.

"We think we are OK to continue on as is unless the laws are changed or a firm precedent is set that would cause us to shift our thinking," Ayre said. "We have always maintained that being private was a competitive advantage in a volatile industry, and this is a very good example."

He also has no immediate plans to begin policing where deposits are originating.

"If the money is in our system internationally, we will continue to make it the players responsibility to ensure they are in a legal jurisdiction to transmit instructions to us on their accounts," Ayre said.

The Bodog Marketing Conference, which was scheduled for this week in Las Vegas, was cancelled in light of concerns raised over Carruthers' arrest. The company plans to release information with the rescheduled date and venue, which will not be in the United States, at a later date.

"I don't think you are going to see any senior executives of any international gaming companies flying anywhere near the U.S. for the next while," Ayre said.

Eduardo Agami, president of Costa Rica-based sports book SBG Global, said the sports book, like Bodog, experienced an influx in business following the shutting down of BetonSports.com.

"The arrests have affected traffic due to the fact that the site was taken down and trading halted," Agami said. "Clients seek where to go in these instances."

Agami's business philosophy dictates that a company must always adjust and reassess its position with the changing climate even in times when there are no events of this sort, he said.

"The position that reigns in the U.K. is that there is no disposition against U.S.-facing business," he said. "Therefore, not being a U.S. company, I don't expect to change our model as yet. Though, we are looking at new markets so as not to rely so heavily on the one. But that was our position before this unfortunate event."

Agami said the BoS situation does not change his position on U.S. travel.

"I believe from looking at the indictment that the reasons for the arrests are particular to their business and differ with ours," Agami said. "Therefore, I wouldn't avoid nor provoke any given situation--travel or otherwise."

Agami also pointed out that the busts could be particularly damaging to businesses based in Costa Rica. As president of the Costa Rican Association of Data-Processing Centers and Call Centers, he is concerned about the potential backlash for the country's sports betting industry.

"From the point of view of the association, there is great concern that this might re-create a trend of thought and perspective towards the industry here in Costa Rica since we've always had to face perception issues here with not only the government, but the society at large," he said. "We've made great inroads since the days of the wild west perception we were subject to, and this might be a set back in the progress we've made."

Other Reactions

Ron Martin, chief executive of payment processing company Neteller, said he will travel to the United States in coming days despite growing concerns among online gaming executives that they could be arrested as Carruthers was.

"I don't have any qualms about it," said Martin, who insisted that online gambling companies still have a future.

"The long-term situation is going to be a regulated environment (in the United States, not a prohibited one," he said. "They can't put it back in the box."

***

PartyGaming is taking a cautious approach toward travel. CEO Mitch Garber said Friday that he has no imminent U.S. travel plans, and the company has gone as far as banning its executives from traveling to the United States. PartyGaming will, however, launch a major ad campaign in the United States for its PartyCasino site. Garber said the company's casino games have not been marketed, and the group intends to change this with a strong branding campaign across Europe and North America as well. He also said that the action against BetonSports will not deter the company from legally marketing in the United States through the Internet, television, radio, newspapers and sponsorship deals.

***

British betting and gaming group GalaCoral announced Friday that it has blocked U.S. bets on its Web sites, although, according to the company, a very small number of its business comes from the United States. "This is in view of the current uncertainty over the U.S. legal situation," a spokesman for the company said. "A very small number of U.S. citizens have played bingo and poker on the Web site, and Gala has never taken bets on U.S. sporting events and has never advertised in the U.S."

***

Swedish gaming operator and software provider 24hPoker announced today that it, too, will bar U.S. players from all gaming services provided by the company and on its partner sites in the B2B Poker network. They will cease serving U.S. customers on Sept. 1.

Surveying the BoS Aftermath is republished from iGamingNews.com.
Emily D. Swoboda
Emily D. Swoboda