Earlier this month Peter Dicks, the (now ex) non-executive chairman, of Sportingbet PLC was arrested and detained in New York while on a business trip unrelated to his work with Sportingbet. The state of Louisiana wants to extradite Dicks and charge him for owning an online sports book. Dicks spent a few days in Rikers, got out, had the governor of New York withdraw the warrant, and the arraignment was postponed until September 28th. He's since quit being chairman of Sportingbet PLC and has returned back to England. In July David Carruthers, the (now ex) CEO of Betonsports was arrested while on a flight stop-over in Texas, for running an online sportsbook. He was wanted by the Department of Justice, so knowing the governor probably wouldn't have helped him much (not that I know if he did – I'm just saying). Carruthers was fired from his post and is now waiting for his trial. Betonsports has since stopped allowing any and all US residents to deposit on their website. The company has more or less done a runner on their players and is blaming everyone else for their lack of payment return. Other online sportsbooks have stopped accepting bets via telephone in a quasi-attempt to placate the anti-internet gambling giants in the US. This is all bad for Sportingbet, right? Looking at it as an outside observer one would guess that Sportingbet would pull a Betonsports.com and quit allowing US citizens to bet on their site. However, logic doesn't seem to work much in this business. Sportingbet's site never went down, their stock quit trading for a day (if I recall correctly), and they still allow for US citizens to deposit and bet. In fact, the future CEO of Sportingbet wants even more US citizens betting on his site. Is your jaw on the floor right now? Because mine was when I read that in the interview Andrew McIver, the future CEO of Sportingbet, had with The Financial Times. Right now Nigel Payne is the CEO of Sportingbet, but he is stepping down from this post on October 17th when McIver will step up. Currently McIver is Group Finance Director. Payne will remain an Executive Director, responsible for regulation and business development. The Financial Times interviewed McIver and found out that he has no intentions of avoiding the US. According to the article, "Sportingbet‘s new chief executive on Wednesday defied the legal onslaught from the US, which has seen British online gambling chiefs arrested, by vowing to push further into the American market." Every time I read that line I can't believe it. Seriously, I'm shaking my head in disbelief right now. I can understand why he wouldn't want to lose US players as clients. The US gives the $12 billion dollar online gambling industry half of their players and close to eighty percent of their profit. Letting them go is practically financial suicide. "Mr McIver said in spite of rivals such as PartyGaming and 888 Holdings emphasising their non-US plans to investors last week, Sportingbet continued to believe the US was the only market worth serious investment." “It’s the US – or what’s the point? I still hold that view,” Mr McIver said. “Everyone knew it was a risk. Eight years ago, people came in and supported this industry and knew full well the risks,” he added. McIver right on that score, in 2000 Jay Cohen was arrested and instead of pleading out he stood trial for owning an internet sports book. He served two years in jail. Even before that the United States was threatening the owners of internet casinos and sports books and the Department of Justice was going after any company that accepted advertising from an internet gambling establishment. McIver went on to say that for all the talk by their rivals regarding non-US growth markets, “if you take the US business away they will be a shadow of their former selves”. I couldn't agree with him more there. The US is too huge of an industry to simply let it go. Look at Betonsports.com, they let go of the US and have been devastated by the loss. I know that there are online gambling companies out there which choose to not accept bets from the United States. However, I don't know any of their names off the top of my head, which shows how large they are because I know every big company in this industry by name. There were a few bits of the interview that I disagreed with. McIver commented on Europe being a "fledgling market". He explains, "The reason they are trying to do it, is if you launch in Europe and had nothing, the growth is going to be a big percentage." I disagree with that completely. Internet casinos have been doing sites in multiple languages in order to take a chunk of that pie for years now. If it was a fledgling market Italy wouldn't be bothered to ban over 600 sites, Germany wouldn't be threatening all internet sports books, and France wouldn't have arrested the co-CEO's of Bwin. I think Asia defines a fledgling market. There are so many languages and cultures there that it’s a difficult market to break into and in many regions the internet is relatively new to the general population. That is a fledgling market. Every major internet gambling establishment today has made at least a passing comment showing interest in Asia. McIver understands the online gambling industry. He recognizes the risks of working of leading such a controversial company and he seems to welcome them. While I agree with his view towards the US (it is a cash cow no matter how you look at it). I wouldn't want to be him and accept the risks associated with running an online sports book today. It's not that he won't be able to travel to the United States. It's the possibility that he could be extradited and arrested from Britain for owning and operating a sports book that allows for US citizens to deposit. Doubtful, but possible. Posted on: September 26, 2006
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