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Trouble ahead for the online gaming industry after reports that the US Justice Department has charged BetonSports and three other companies with racketeering, conspiracy and fraud.

AIM-listed BetonSports suspended shares just before 8am this morning, pending an announcement, while AFX is reporting that "the indictment seeks forfeiture of 4.5 bln usd from Kaplan and the co-defendents, as well as various properties", which would spell more trouble for BetonSports investors (shares fell by almost 20% yesterday).

The company's CEO, David Carruthers, was arrested in the US yesterday and is thought to have spent the night in jail.

A St Louis court has handed out a temporary restraining order to try to prevent the company from continuing to accept bets in the US. It also charged Gary Kaplan, the company's founder, with 20 felonies. Kaplan is not thought to be part of the existing management team.

BetonSports said it heard of this restraining order via a press release issued late last night, but has not been served with any formal papers. It plans to "make further urgent enquiries with the relevant US officials in the course of today to clarify the position".

The company has requested a hearing within 10 days.

Chris Lake

Published 18 July, 2006 by Chris Lake

Chris Lake is CEO at EmpiricalProof, and former Director of Content at Econsultancy. Follow him on Twitter, Google+ or connect via Linkedin.

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