good piece from New York Times + update + LA law
good piece from New York Times + update + LA law
Chairman of Online Casino Arrested in New York
By MATT RICHTEL and THOMAS CRAMPTON
Published: September 7, 2006
In an escalation of the American attack on Internet casinos, law enforcement officers in New York arrested late Wednesday night Peter Dicks, chairman of the board of SportingBet, an online sports book that is publicly traded on the London Stock market.
Legal experts with knowledge of the case said Mr. Dicks had been detained at Kennedy International Airport based on a warrant issued by the state of Louisiana. Louisiana state police were unavailable for comment.
George Hudson, a spokesman for SportingBet, declined to comment. The arrest led the company to halt trading on its stock.
The arrest of Mr. Dicks comes seven weeks after federal law enforcement officials arrested the chief executive of a competing Internet sports book, BetOnSports, when he was on a flight layover at the Dallas airport. The executive, David Carruthers, and his company, which also trades on the London Stock Exchange, were charged with taking bets illegally over the Internet.
The federal government, and some states, assert it is illegal to operate an Internet casino. But their position puts them at odds with the policies for licensing license and regulating online betting parlors in many countries, including Costa Rica and Antigua, where many casinos base their operations.
It also puts the states and federal government in conflict with millions of Americans who place bets online, using their home computers to wager on sporting events and games like blackjack and poker.
After the arrest of Mr. Carruthers, legal experts and industry analysts and executives, said they presumed that the American law enforcement effort was aimed at one company, BetOnSports. But that presumption has changed.
?We thought this was company specific. Now we know it?s broader than that,? said Sue Schneider, the publisher of Interactive Gaming News, an online magazine that focuses on the Internet casino industry. ?Now we know it?s broader than that.?
Ms. Schneider, echoing the sentiments of other industry analysts, had said the one obvious lesson after the arrest of Mr. Carruthers was that executives of online casinos should not visit the United States and risk arrest. She and other analysts and legal experts said it was mind-boggling that Mr. Dicks had visited anyway.
?It?s absolutely amazing,? said I. Nelson Rose, a professor and Internet gambling expert at Whittier Law School in Costa Mesa, Calif. Mr. Rose speculated of Mr. Dicks: ?Apparently he convinced himself this all involved Carruthers and BetOnSports.?
Mr. Carruthers, who was let go as chief executive of BetOnSports, is under indictment by the attorney general for the Eastern District of Missouri, Catherine L. Hanaway. Reuters reported that it had confirmed with the Louisiana State Police that Mr. Dicks was arrested as part of an indictment issued in May that was part of an ongoing investigation of SportingBet.
Lawrence Walters, a Florida attorney who specializes in Internet gambling law, said Louisiana has been interested in recent years in exploring whether online gambling operations violated state law that prohibits residents under the age of 21 from placing wagers.
But, more generally, Mr. Walters said he doubted that state laws could be read as regulating Internet gambling because the activity crosses state lines and thus would fall under federal jurisdiction.
?State law cannot be applied constitutionally to Internet transactions given the Commerce Clause,? Mr. Walters said. He added that if state law is ultimately seen as being applicable, it could create an enormous headache for offshore casinos.
?It would be a substantial and costly effort to have 50 lawyers in 50 states,? he said, adding more generally of the arrest: ?It?s a concerning development and one that?s going to potentially require the industry to re-evaluate its legal position.?
Under Louisiana law, it is illegal to place a wager on the Internet and to operate an Internet casino. The law says that the state is concerned about protecting citizens, in particular underage residents, from ?the pervasive nature of the gambling which can occur via the Internet.?
The law makes placing an online wager a crime punishable by up to $500 or six months in prison, or both. The penalty for operating an online casino is up to a $20,000 fine and five years in prison.
For its part, SportingBet, one of the largest online gambling operators in the world, had revenue of more than $190 million for the financial year ending in July 2006, with two-thirds of the revenue generated from the United States, said Mr. Hudson, the company spokesman.
As for Mr. Dicks, 64, Mr. Hudson described him as a father of four who built a career investing in technology companies both in the United States and Britain.
?He?s not a swashbuckler like some of those other online betting types,? Mr. Hudson said. ?He?s just a plain vanilla kind of a man.?
Mr. Dicks joined SportingBet as nonexecutive chairman in January 2000.
He is the chairman of Private Equity Investor and on a member of the boards of a number of British and American companies, including the Nasdaq-listed Standard Microsystems, Polar Technology Trust, and the British-listed Graphite Enterprise Trust. He founded Abingworth Plc, which specialized in private equity investments.
Shares of other offshore casinos plunged today. But some analysts said the offshore casinos cannot be undone by the lengthening arm of American law enforcement.
?Online gaming will not end unless they prosecute every one of the 50 million Americans who bet online every year,? said Andrew P. Lee, a London-based online gaming analyst at Dresdner Kleinwort. ?But from an investor?s perspective this becomes a very difficult sector to invest in.?
The high demand from consumers means that a United States government ban will likely do little to stop the growth of online gambling, Mr. Lee said.
?The U.S. accomplishes nothing by prohibiting online gaming,? Mr. Lee said. ?In the end, they will be about as successful as prohibition was in banning alcohol.?
While the drop in share prices for the online gaming sector reflected concerns over the arrest, Mr. Lee said the response was relatively muted.
?By dropping 10 percent rather than 30 percent you can see that investors know there are gamblers outside the U.S.,? Mr. Lee said. ?These are U.K.-listed companies and not fly-by-night operations run out of Antigua or Costa Rica.?
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Sportingbet: Peter Dicks update
What we know going into the weekend is that the offense Peter Dicks is accused of, while worrisome, is not nearly as bad as what David Carruthers - former CEO of BetonSports - is accused of. In fact, Dicks was quick to be freed on bail nearly two days after his initial detention whereas Carruthers spent about a full month behind bars awaiting bail.
Sportingbet said Friday that Mr Dicks had been arrested on allegations relating to the company's possible breaches of a Louisiana statute on "offences affecting general morality". That's a helluva lot better than say money laundering, racketeering, tax evasion - all charges lodged against Carruthers.
Speaking of David Carruthers, prosecutors in St. Louis where Carruthers is to be tried, have dispelled any rumors that the case against Dicks has any relation to the federal case against BetonSports. Prosecutors were adamant that the two cases were unrelated. This bit of information has brought a somber sigh of relief from some within the online gambling sector.
The state gaming law in Louisiana is so all-encompassing that all forms of online gambling - not just sports betting - could now be in danger of prosecution by states with more updated laws such as Louisiana. Washington State has the most updated law - specifically making online gambling by its citizens a Felony C offense. That law is expected to be challenged by special interest groups, though none have come forward thus far.
Until recently, online poker and casino companies believed they were somewhat immune to US laws that stressed a 1996 "Wire Act" originally implemented to stop organized criminal activities via sports betting over the phone. It is looking more and more as if Sportingbet may have become a target of Louisiana State law moreso for its Paradise Poker site than any of its sports betting brands. The company's flagship brand, Sportsbook.com, is the McDonald's of online gambling, considered the biggest in the world.
Dicks was free on bail Friday while he awaits a decision as to whether he will face extradition back to New Orleans. The judge made it clear he did not deem Dicks a flight risk.
Most important to consumers, someone from within the Sportingbet organization who wished not to be named told ******.com late Friday night "I can tell you that internally the guys in Costa Rica and London are not worried -well except for the fact that many of the old school, upper management
gringos (Americans) feel trapped offshore now... SCARY times for them."
Christopher Costigan,
Originally published September 9
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Peter Dicks Flushed By Louisiana Gambling by Computer Law
Author: Steve Sabludowsky | 9/8/2006
New Orleans, La.
You can bet that Peter Dicks is flushed as he fights to stay away from extradition to a Louisiana Court.
The Louisiana anti-Internet Gambling law was designed to do exactly what it the state is doing?keep Internet gaming away from Louisiana.
Peter Dicks, Sportingbet?s British chairman, was arrested Thursday morning at New York?s JFK airport and that arrest was linked to Louisiana?s desire to prevent anyone having anything to do with Louisiana and gambling by computers. There are a few exceptions to the law.
From news reports, Mr Dicks told a US court yesterday he intended to fight extradition to Louisiana.
However, the law is very clear. In general, anyone who has anything to do with gambling with a computer better stay clear of Louisiana. That means users, owners of operations, and even provider of services to online gambling.
The law in question is 14?90.3. Gambling by computer
In pertinent part is Subsection B and E which say:
B. Gambling by computer is the intentional conducting, or directly assisting in the conducting as a business of any game, contest, lottery, or contrivance whereby a person risks the loss of anything of value in order to realize a profit when accessing the Internet, World Wide Web, or any part thereof by way of any computer, computer system, computer network, computer software, or any server.
E. Whoever designs, develops, manages, supervises, maintains, provides, or produces any computer services, computer system, computer network, computer software, or any server providing a Home Page, Web Site, or any other product accessing the Internet, World Wide Web, or any part thereof offering to any client for the primary purpose of the conducting as a business of any game, contest, lottery, or contrivance whereby a person risks the loss of anything of value in order to realize a profit shall be fined not more than twenty thousand dollars, or imprisoned with or without hard labor, for not more than five years, or both.
The law then goes into the definitions and is designed to prevent individuals in Louisiana from engaging in that business and those outside of Louisiana from offering gambling to citizens within Louisiana.
Whether Peter Dicks has other defenses will be interesting. But, unless it is challenged as being unconstitutional, many Internet gambling companies might be aware of serious consequences which could include spending five years in prison.
The author of this article is an Attorney who practices Internet Law in the State of Louisiana
