Gambling bill in focus after industry arrests

Washington (Reuters) – The indictment of BETonSPORTS executives for racketeering should add momentum to U.S. legislation that aims to ban broader types of Internet gambling, two Republican backers said on Tuesday.

The U.S. House of Representatives overwhelmingly approved a bill earlier this month that would prohibit most forms of Internet gambling and make it illegal for banks and credit card companies to make payments to online gambling sites.

A similar bill is pending in the U.S. Senate, where supporters are scrambling to win passage before an August recess.

The $ 12 billion-a-year online gambling industry was shaken this week after a grand jury in St. Louis indicted BETonSPORTS and some of its executives.

Chief Executive David Carruthers was arrested while changing airplanes at the Dallas-Fort Worth Airport and three other men linked to the company were arrested in Florida. An arrest warrant was issued for BETonSPORTS founder Gary Kaplan, who lives in Costa Rica.

The high-profile case is being prosecuted by a newly appointed U.S. Attorney in St. Louis, Catherine Hanaway, and accuses Kaplan of taking bets from undercover federal agents. The government said in court documents it could seek forfeiture of more than $ 4.5 billion and other assets from the company and its executives.

Tim Evans, an attorney for Carruthers, said a detention hearing would be held Friday in Fort Worth to determine if Carruthers must remain in jail. Carruthers will be arraigned in St. Louis on the racketeering charges at a future date, he said.

„This recent indictment of online gambling executives strengthens the need for legislation to ban Internet gambling,“ Sen. Jon Kyl, an Arizona Republican and bill backer, said in a statement.

„I am hopeful that legislation I intend on moving through the Senate this year will provide the Justice Department with the tools necessary to continue aggressively pursuing those that wish to circumvent the rules and engage in this sort of illegal activity,“ he said.

Rep. Bob Goodlatte, a Virginia Republican and co-author of the House gambling bill, praised the prosecution.

„We’re very pleased that the Justice Department is taking action here with the laws they have available,“ Goodlatte told Reuters. „We join with them in trying to make it clear that the law covers all forms of gambling.“

The Republican-backed bill has been criticized by some as an election-year appeal to the party’s conservative base.

Goodlatte said the legislation is needed to protect minors from becoming addicted to online gambling, and to clarify that most forms of gambling are prohibited.

„It is quite clear that the Wire Act covers sports betting,“ Goodlatte said. „But the Wire Act because it was written in 1961 is not at all clear as to whether it covers other forms of gambling.“

The existing law does not clearly ban such things as a virtual roulette wheel, poker and other kinds of online gaming, Goodlatte said.

The site offers betting on baseball, soccer, football, boxing, rugby and other sports as well as casino games such as poker, blackjack and craps. The site awards „casino loyalty points“ for each bet placed.

Goodlatte also noted that executives with other overseas gambling companies should take note of the prosecution.

„They should be wary of the United States exercising its treaty rights to seek extradition,“ he said. „Knowingly taking bets from U.S. citizens is against the laws of many states, and they should be prosecuted.“