The United States has arrested a second Internet gaming executive, adding to fears it is cracking down on the lucrative industry and sparking share price falls on Thursday that wiped over $1.5 billion off the market value of the sector.
Online bookmaker Sportingbet Plc said its chairman, Peter Dicks, had been detained by U.S. authorities, mirroring the detention in July of another online gaming CEO on racketeering charges.
Dicks was arrested on Internet gambling charges as part of an ongoing investigation into Sportingbet.com, said Senior Trooper Dwight Robinette of the Louisiana State Police.
Robinette said the arrest warrant was issued for Dicks and others in May. The arrest warrants are sealed and there are no indictments, he said.
Shares across the $12 billion-a-year industry fell sharply, with industry leader PartyGaming plunging as much as 19 percent before closing 9.8 percent lower at 105-3/4 pence. 888 Holdings Plc dropped 15.8 percent.
Dicks was arrested in New York late on Wednesday at JFK Airport on a warrant from Louisiana, said Pasquale DiFulco, a spokesman for the Port Authority of New York and New Jersey.
He was picked up at 11:30 p.m. (EDT) at JFK Airport on an active out-of-state warrant. He's being held by Port Authority police awaiting extradition, said DiFulco, who would not reveal the nature of the charges.
This arrest highlights the U.S. Department of Justice is going after online gaming companies by arresting their board members, said a London analyst who declined to be named.
Analyst Paul Leyland at Arbuthnot Securities said he was keen to know whether the charge sheet contained anything that might allow the extradition of any other Sportingbet executives.
He said the long-term impact on the sector would also depend on whether the charges related to taking sports bets from U.S. citizens or taking U.S. gamblers' money in general, including online casino and poker wagers.
Sportingbet said earlier on Thursday it had sought an immediate temporary suspension of its shares pending clarification of the situation.
Analysts said Sportingbet's U.S.-focused sports betting business was similar to that of BETonSPORTS, whose CEO David Carruthers was arrested in Texas in July.
Carruthers and seven others pleaded not guilty to racketeering and other charges. The Costa Rica-based company has since said it is closing its U.S. business.
Clearly the first indictment against BETonSPORTS was not a company-specific issue, said one London analyst.
News of Dicks's detention overshadowed strong results from PartyGaming, which said core profit rose 47 percent in the first six months of the year to $380 million and stressed it was reducing its dependence on the U.S. market.
PartyGaming said it whittled down the percentage of revenues it takes from the United States to 77 percent in the first half, from 86 percent a year earlier.
PartyGaming has been trying to reduce its U.S. exposure for over a year, partly as a response to attempts by some U.S. politicians to get Internet gaming banned.
PartyGaming Chief Executive Mitch Garber told a conference call on Thursday that the anti-gambling bill, backed by Rep. Bob Goodlatte (news, bio, voting record), faced opposition in the Senate, and time was running short ahead of U.S. elections.
Time is in short supply, and the bill continues to face opposition, but this is politics, and we are not complacent, and the outcome remains uncertain, he said.
(Additional reporting by Jonathan Cable in London)