Risky Business

Is this the end of online gambling's lucky streak? A day after the arrest in a Dallas airport of David Carruthers, ceo of Internet gaming firm BETonSPORTS, authorities last week charged the 48-year-old, along with 10 others connected to the Costa Rica–based company, with racketeering conspiracy relating to the illegal provision of sports betting in the U.S. Complying with a court order, the firm also suspended services to the U.S., home to 85% of its business.

Shares in rival operators tumbled over fears of a U.S. crackdown on firms taking bets from America, where online gaming is ruled illegal. Thanks to fuzzy rules governing offshore operations, U.S. gamblers still stumped up around half the industry's $12 billion in revenue last year.

Offshore sports betting — the kind marketed by BETonSPORTS — is judged illegal in the U.S. under laws originally drawn up in the '60s; sites offering casino-style virtual gaming claimed they were in the clear. But others weren't chancing it: organizers postponed an Internet gaming conference scheduled this week in Las Vegas, blaming execs' jitters over landing in the U.S.

Still, not everywhere is off-limits. Gibraltar-based PartyGaming, the world's biggest online poker operator, pledged to pare down its reliance on U.S. punters; some 46% of its new poker players came from outside the U.S. in the three months to July, double the share a year earlier.

In its sights? The legions of gamblers in China, Japan and the rest of Asia. The firm won't reveal its hand, but Asia "could well be a significant growth area" for PartyGaming, says Richard Hunter, head of U.K. equities at Hargreaves Lansdown Stockbrokers. Plus it would be "a strategic hedge" against a U.S. crackdown. What's Mandarin for dead man's hand?