Sunday, November 05, 2006

The UK will set itself up as an online gambling haven but will extradite
executives to the US if asked, according to Sports Minister Richard Caborn.
The US effectively banned online gambling with a new law earlier this year,
and Caborn and Culture Secretary Tessa Jowell outlined plans to welcome
internet gambling companies to the UK and regulate them. Jowell criticised
the US's stance, saying the UK will not follow suit. "We do not support the
approach the United States has taken," she said. "The enormous risk of
prohibition is that it forces the industry underground." Making unfavourable
comparisons to the US's experience with alcohol prohibition in the 1920s,
Jowell said the UK would instead regulate the industry. She said outlawing
it risked driving online betting consumers into criminal hands. The
politicians were speaking at a summit of international delegates who agreed
a framework to regulate the industry, agreeing protection for gambling
addicts and plans to stop underage gambling. The Department of Justice in
the US had long considered the 1961 Wire Act to outlaw all internet
gambling, but a new law, which was rushed through under cover of a port
security act, made it illegal for financial institutions to process payments
to gambling sites. The impact on UK-listed gaming companies was severe.
Share prices nosedived and Sportingbet sold its US business for $1, claiming
that it released the company from $27m of liabilities. Speculation has
mounted in recent days that 888 and PartyGaming would merge, and Ladbrokes
has also been linked to a bid for 888.

Two British senior executives of online gaming companies had been arrested
in the US prior to the passing of the new law. Though Peter Dicks of
Sportingbet was released, David Carruthers from BetonSports still awaits
trial.

Caborn said despite attempts to attract further business to the US, the UK
would still respect extradition requests from the US in relation to online
gambling. "People have to abide by the laws of particular countries," he
said. "We will not acknowledge people who operate illegally."

The US was said by industry sources to account for at least half of the
revenues earned by online gambling worldwide. $6.7bn of the $30bn spent
every year is spent in Europe, according to UK government figures.