ONLINE GAMBLING STOCKS DIVE - AGAIN - AS US DOJ HOLDS GAMING EXECUTIVE - AGAIN.
07 September 2006
Thu Sep 7, 2006 2:05 PM BST162
By Pete Harrison
LONDON (Reuters) – The United States detained a second Internet gaming executive on Thursday, adding to fears it is cracking down on the lucrative industry and sparking share price falls that wiped over $1.5 billion (800 million pounds) off the market value of the sector.
Online bookmaker Sportingbet said its chairman, Peter Dicks, had been detained by U.S. authorities — a move that mirrored the detention in July of another online gaming CEO on racketeering charges.
Shares reacted instantly across the $12 billion-a-year industry, with industry leader PartyGaming plunging as much as 19 percent, 888 Holdings down as much as 18 percent and Playtech down as much as 17 percent.
Shares in Austria’s bwin.com Interactive Entertainment also slumped.
“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.
Sportingbet said it had sought immediate temporary suspension of its shares pending clarification of the situation. Dicks was arrested at 0100 GMT on Thursday and his hearing is scheduled for 2 p.m. British time, it added without giving a location.
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.
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