Could David Carruthers be the savior of Internet betting?

May 17, 2007 |
By: Julian Dickinson
Could David Carruthers be the savior of Internet betting?

David Carruthers isn’t the only Internet gambling boss facing serious jail time for his involvement in that industry, but he is the only one who seems willing to take on the U.S. over its laws against online betting.

Carruthers is the former CEO of U.K.-based sportsbook, BetonSports.com. He was arrested last July in a Fort Worth, Texas airport during a stopover from Britain to Costa Rica and charged with numerous offenses related to the operation of the company.

Unlike other net betting executives now facing charges, such as bosses from BetUS.com and Neteller, Carruthers is planning to take America to task over the legal basis of the laws which will be used to prosecute him on charges of racketeering and wire fraud.

In a letter sent to former advisors of BetonSports, Carruthers asked his allies to lobby the U.K. government for support in his case. He also accused the U.S. government of actions that have “destroyed businesses, free competition and lives” and disclosed that he will use a recent World Trade Organization (WTO) ruling as a part of his defense.

Last month the WTO ruled in favor of Antigua and Barbuda after the tiny Caribbean nation challenged American laws against Internet betting which Antigua claimed were in conflict with trade agreements. Antigua, which is home to a large number of Internet gaming companies, complained that by using laws such as the Wire Act and the Unlawful Internet Gambling and Enforcement Act (UIGEA) to force banks to deny payments to and from online casinos and sportsbooks, the U.S. damaged an important sector of the Antiguan economy and cost the country millions of dollars.

In a ruling on Feb. 15, 2007, a WTO panel found the U.S. in violation of international trade agreements and “was acting inconsistently with its obligations under ... the GATS (Global Agreement on Trade in Service).” The panel also found that the U.S. defense of “public morality” did not apply because American laws allow other forms of Internet betting, such as horse racing and lottery betting.

The U.S. did not amend its domestic laws to bring them in line with international obligations. Instead they claimed they never meant for Internet gambling to be included in the agreements and essentially rewrote their obligations under GATS.

In his letter Carruthers wrote, “The U.S. decision to arrest me not only shut down BetonSports, but the actions by the U.S. government have destroyed nearly all the public online gaming companies in the U.K.

“Based on what the WTO has now called a treaty violation, more than $10 billion in equity of U.K.-listed companies were wiped away. Three U.K.-listed gaming companies have closed completely and other U.K. citizens have been arrested as well, victims of a policy that the WTO has now determined as unfair and violates their treaties.”

This case could become one of the most significant in the long history of legal wrangling between the U.S. government and the online gambling industry.

Carruthers isn’t the first executive to come under the hammer of American justice. Other CEOs like Ron Sacco of BetCris and Jay Cohen of WSEX have gone to jail because of their positions in the industry. The difference, however, is that Sacco and Cohen didn’t have a weapon like the recent WTO ruling to wield in their defense.

Before the UIGEA was passed in Congress last October, U.S. law enforcement used the 1961 “Wire Act” to prosecute offshore bookmakers, but that was an archaic law which didn’t account for the


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