Online Casino Markets React To Arrest

Wednesday July 19, 2006

Online gambling executives and investors alike will be anxiously watching the stock market scene today in the wake of stock declines that have hammered the industry following the arrest and continued detention of Bet on Sports CEO David Carruthers over the weekend.

Late Tuesday, London gambling stocks and to a lesser extent Canadian gambling shares had declined sharply, presumably as a result of nervous investors dumping their holdings.

BetonSports shares fell by as much as 25 percent before trading was halted at the company's request, but the biggest fallout hit Sportingbet, where shares fell by 100p to 282p, almost half their level before BetOnSports announced on Monday that Carruthers, had been detained. The stock fell 36 percent Tuesday after falling 13 percent on Monday.

Although it does not offer sport betting, Party Gaming, the internet poker company, fell 17p to 85p, down from a flotation price last year of 116p. Almost GBP 1 billion has been wiped from its market value in two days. Shares dropped 17 percent on Tuesday on the London Stock Exchange and played a role in dragging the FTSE index lower.

Playtech lost almost a third of its price, as confusion reigned about the scope of the DoJ's planned actions

BetOnSports asked for trading in its shares to be suspended because of uncertainty over its future. The company also temporarily closed its main website to business, and said that its lawyers were reviewing implications of a federal temporary restraining order to stop it taking bets from Americans and require it to return punters' money held in accounts.

A federal court issued the temporary restraining order to prevent BetOnSports from accepting bets in the United States, which is reported to be the company's biggest market. In terms of the order, it is understood the company is required to stop accepting bets from the US; to place notices on its US-based websites saying it does not accept bets on sporting events and to place full-page newspaper adverts saying telephone betting services are "a violation of US law".