Carruthers Out of Prison on Bail

David Carruthers, the former chief executive officer of BetonSports, was released from prison today after one month in custody. Carruthers’ bail was set at $1,000,000.

A month ago, Carruthers was the outspoken CEO of BetonSports, and attracted federal attention with his claims that BetonSports activities within the United States were “fully legal and licensed”. The Department of Justice investigated BetonSports activities, and arrested Carruthers on July 16 as he was passing through Dallas airport in transit from London to the BetonSports headquarters in Costa Rica.

The Department of Justice charged Carruthers with racketeering and claimed BetonSports activities within the United River Belle Casino States were in breach of the Wire Act of 1961. BetonSports immediately attempted to distance themselves from Carruthers and the impending legal action, dismissing him from his executive chair, failing to provide him with legal support and, recently, discontinued the acceptance of sports bets from all US residents.

Carruthers had been detained in a medium-security federal prison in Fort Worth. Attending a bail hearing five days after his arrest, Carruthers was taken into court shackled and chained to a line of prisoners. Carruthers faced difficulties in raising the $1,000,000 bond and meeting the conditions set by the judge in his case, but last night Carruthers was able to retire to a St. Louis hotel room. The conditions of his bail include restrictions on his movements – he can only leave the hotel to attend court, meet his attorney or for medical emergencies.

In the days following Carruthers’ arrest last month, the online gaming industry was thrown into widespread panic, with hundreds of millions of dollars wiped off the value of blue-chip gaming companies like PartyGaming and SportingBet almost overnight. Not long before Carruthers’ arrest, the Goodlatte-sponsored Net Gambling Prohibition Bill was overwhelmingly approved by the US House of Representatives, and passed on to the Senate for confirmation. For a few days after Carruthers’ arrest, it appeared that there would be a nationwide crackdown on internet gambling companies, and many of these companies circulated internal memos advising their executives to cancel any plans for US travel. In time, the dust settled and the expected crackdown did not ensue.

The market has largely corrected itself as industry analysts began to realize the arrest of Carruthers was not necessarily a declaration of war by the US government on the industry, although the timing of Carruthers’ arrest was highly coincidental, if nothing else.

As we move forward in the year, it would seem that the industry is safe for now. It appears unlikely the Senate will have the time to ratify the Goodlatte Bill before the upcoming elections, and online gaming lobbies are being formed to combat the moves against the industry. Despite this, there has been a strong emphasis on the need for the industry to decrease its heavy reliance on US punters, with Europe and Asia looming as the next big markets.

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