Penny auctions – something we didn’t know too much about – have been reported in the news recently.

Dr. Mark Griffiths – Professor of Gambling Studies at the University of Nottingham – will be assessing the reasons why ‘the activity [of bidding on penny auctions] is akin to gambling’, in January’s edition of World Online Gambling Law Report.  

To participate in penny auctions, bidders place a bid by sending a text message (at £1.50 per bid, plus operator’s costs), or by creating an online account where the bidder buys a ‘bundle’ of bids. There is no limit on the amount of bids that can be made on the same auction product. There is also no time limit for the sales time, however if no bids have been made for e.g. five minutes, then the auction is automatically closed. There are also auction opening times, which are product specific (e.g. 10am – 10pm). If the product has not been sold by the stipulated the time, the auction will continue again the next morning.  

Griffiths stated that penny auctions are similar to lotteries and the UK’s Gambling Commission should investigate whether they should come under regulatory jurisdiction.

However, the Commission said that it is not convinced that penny auction sites constitute gambling, but said that it will monitor developments in the area.

As penny auctioning is new – well, to me anyway – I will be watching closely to see whether the Commission will take any regulatory steps – as suggested by Griffiths – in 2009. In the meantime, have a very Merry Christmas and a lovely New Year!

Sarah Syed

 

Below is a translation of a press release from the Dutch Council of Ministers, provided by Aernout Kraaijeveld, an Attorney with Van Mens & Wisselink;

Cabinet to examine increased transparency in allocating licences for national lotteries

Press Release | 19-12-2008

The Cabinet wants to increase the transparency of the licensing system for national lotteries. It  has approved proposals put forward by Minister of Justice, Hirsh Ballin, to conduct a feasibility study.  Under the current system, licenses are automatically renewed and newcomers are precluded from competing for any of the licences.   

European Law is placing increased pressure on the policies governing equality and transparency. Accordingly, the Cabinet wishes to adopt objective and transparent procedures for the allocation of licenses for charitable lotteries, the Lotto, the Instantloterij, sports betting and the totalisator. The Ministry of Justice is to examine the appropriate selection mechanisms and criteria which may be applied in operating those procedures. This approach is in keeping with gaming policy in the Netherlands, which provides for a regulated market and is aimed at curbing excesses, such as gambling addiction and money laundering.  

At the same time the Cabinet will be looking at ways to increase the so-called ‘level playing field’ of the lotteries. Currently, the terms and conditions for the various national lotteries differ substantially. For example, the Staatsloterij is required to pay out a minimum percentage (60 percent) of its income in prize money, whilst the charitable lotteries such as the Nationale Postcode Loterij, BankGiro Loterij and Sponsor Bingo Loterij are required to distribute a minimum percentage to charitable causes. A study will be made to ascertain whether more comparable terms can be imposed on the various lottery organisations.

The Cabinet decision follows consultations on the new Betting and Gaming Act. Numerous suggestions made in the consultation round have resulted in a revision of the initial legislative proposal. The announced changes are also pertinent within the context of the European developments. European Member States may, in principle, implement their own gaming policy, provided that it is applied with consistency. However, European case law would indicate that the policy is being subjected to increasingly tighter requirements.

This decision will necessitate a legislative amendment on a phased basis. Therefore, the Minister of Justice wishes to form a Gaming Authority to precede a more rigorous revision of the gaming legislation. The formation of the Gaming Authority will go hand-in-hand with the appropriate administrative and criminal law competency, which will provide for a more intensive and effective monitoring of the gaming sector.

A study is also to be conducted into the possibility of introducing statutory provisions to govern internet gaming. Notwithstanding that earlier legislative proposals were rejected by the Upper House, it would appear that statutory regulations in keeping with the Dutch gaming policy, are necessary in order to combat illegal gaming.

Many thanks to Van Mens & Wisselink for providing the translation.

Andy Brown

Cooperation between regulators, age verification, the failure of US prohibition and regulations proposed by the Remote Gambling Association on a statutory levy to tackle problem gambling were the main items of discussion at the Remote Gambling Association’s (RGA) Annual General Meeting (AGM), which took place at the Institute of Engineering & Technology in London yesterday.

Andre Wilsenach, Chief Executive of the Alderney Gambling Commission, said that the International Association of Gaming Regulators (IAGR) had agreed a draft of common standards for the regulation of online gambling, which it has been working on for the last four or five years. Wilsenach pointed out that when legislation on online gambling was drawn up, gamblers playing with one online casino were playing against a host licensed in a single jurisdiction, however this has now changed due to outsourcing, which means that an online casino might have services licensed in several different jurisdictions, necessitating common standards.

Wilsenach said that he has been in discussion with the American Gaming Association (AGA) for the past two weeks and while they have previously been opposed to the idea of regulating online gambling, they are now considering it as a possibility. He said that the first thing they asked was if there are a set of common standards in Europe, and that the first thing that the United States will look at now that prohibition of online gambling has failed is where regulation in Europe stands.

Tobias Ellwood, MP for Bournemouth East and Shadow Minister for Culture, Media and Sport, outlined some of the Conservative party’s ideas for the regulation of online gambling, should they be elected. He raised the possibility of linking the ability to advertise in the UK with the level of standards adopted by online gambling operators, as well as the idea of introducing a prepaid card that would be used specifically for online gambling.

John Greenway MP, Chairman of the Responsibility in Gambling Trust (RIGT), said that the Department for Culture, Media and Sport (DCMS) is soon to publish regulations on a statutory levy to tackle problem gambling, and urged the industry to commit to £5 million in annual funding to tackle the problem by Christmas to stand any chance of retaining the current voluntary levy. He is to ask the trustees of the RIGT to confirm plans for the RIGT to continue raising funds to tackle problem gambling on Friday 20 November, even if a statutory levy is introduced. He argued that the RIGT would still be necessary, as if a statutory levy is introduced, the Gambling Commission would be likely to decide how to distribute funding towards tackling problem gambling.

Wes Himes, the RGA’s European Advisor, provided his usual amusing European regulatory round up – this time in the style of the Eurovision Song Contest, following last year’s ‘horse race’. However, importantly, he stated that the argument in Europe has moved away from considering prohibition or licensing towards what type of licensing is acceptable under European Union law. Following on from Andre Wilsenach’s point about increased regulator cooperation, he said that the regulation of online gambling has now moved onto the European Commission’s main agenda, and that a Directive on gambling could be possible at some point in the future.

Clive Hawkswood, Chief Executive of the RGA, said that he expected the outcome of the RGA’s Trade Barriers Regulation (TBR) complaint, lodged with the European Commission in December 2007, to be known by the end of the year. He confirmed that the AGA is now “more likely” to support the idea of regulation of online gambling.

Hawkswood said that the voluntary levy for problem gambling was not working efficiently and that the message was not getting across that the vast majority of gamblers enjoy online gambling in a moderate and mild way. He said that the government is not accepting its responsibility as a regulator with regard to problem gambling, pointing out that the drink and tobacco industries do not have to pay a levy towards treating addicts. He pointed out that the government spends a large amount of money advertising against drink driving, yet the online gambling industry is being criticised for not making up a comparatively small amount within a voluntary levy.

Hawkswood pointed out that whilst the industry is not “recession proof”, it could benefit from a general shift from High Street purchases to online purchases. It was pointed out that the worldwide online gambling industry is in a healthy state, with a Gross Gaming Yield estimated at £20 billion for 2008.

Andy Brown

 

A lawyer has confirmed that the Italian government is still debating changes to its remote gambling legislation, following reports that Boss Media is creating a new Italian poker network following legislative changes.

“The legislative changes they are referring to occurred in 2007”, said the lawyer. “Under the skill gaming regulations, only operators who already hold a concession for the operation of public games covered in the Bersani Decree [Article 38 of Decree-Law no. 223 of 4 July 2006, converted with amendments by Law no. 248 of 4 August 2006] are authorised to offer such games remotely”.

Boss Media is understood to be launching the new network in partnership with Lottomatica Scomesse, which holds such a concession.

The European Commission was notified of Italy’s draft decree on remote gambling on 28 December 2007 - as reported by World Online Gambling Law Report - however it is still debating some of the proposed legislative changes, said the lawyer.

 

The Treasury Department of the Isle of Man launched a consultation on its Gambling Duties Bill on 17 April, which replaces the Betting Act 1970 and the Pool Betting Acts 1961-70 and provides a 'comprehensive, harmonised excise duty control structure' for all its licensed gambling operations, including online.

Betting shops and pools operators were historically licensed under the old Acts, but the licensing and regulatory regimes were transferred to the Online Gambling Regulation Act 2001 (OGRA) in 2007. There are a 'small number' of betting shops licensed on the Island, but no pools betting operators.

As such, most operators now pay online gambling duty under OGRA. However, because pool betting duty is governed by the Island's Customs and Excise Agreement with the UK, any future licensed pools betting operators would be liable to the same rate of duty currently chargeable in the UK - 15%.

The Gambling Duties Bill takes account of this, replacing section 5 of OGRA, which deals with online gambling duty. 'Any secondary legislation dealing with duty payments, period returns and so on would also require replacement', the Treasury adds in the consultation document.

Comments must be submitted to Customs and Excise by 20 June, with a final version of the Bill to begin its process through Tynwald (parliament) 'before the end of 2008'.

Evelyn Heffermehl of ULYS reports

Opening of the French online gaming and betting market: the presidency has not yet decided on the “hows”, but the process is now irreversible.

1. Durieux report

Mr Sarkozy declared it publicly a few weeks ago: France will open its online gaming market. The process has thus now become irreversible.
At the beginning of this month, the report issued by Mr. Bruno Durieux on the opening of the French online gaming market was given to the Prime Minister, Mr. François Fillon, and to the ministry of budget, Mr. Woerth. The President of the French Republic, Nicolas Sarkozy, is due to “validate” it in a near future.

2. Exclusion of lotteries and gaming machines

The online opening would only concern the online sports betting, casino and poker sectors. Lotteries and gaming machines would apparently be excluded from the scope of the opening.

3. Operators are preparing to enter the market

Big European and French groups such as TF1 are preparing for the opening of the market. Capital risk funds and investment companies focused on the online gaming industry are being created in France, getting ready to move in. Partouche and Barrière, the two main casino operators have already been granted licences respectively in Gibraltar and Malta.

4. Partnership with EU members

According to public declarations made to the press by the budget ministry, Mr. Woerth, France will work on the legal framework of the reform in partnership with some of its European partners (Finland, Germany, Belgium, Netherlands, etc.). A first meeting is envisaged at the end of April.

5. Interdepartmental structure

Moreover, a new interdepartmental structure should be created with the mission of granting licenses to online gambling operators. Authorized online gambling operators will have to meet very strict requirements relating to money laundering and addiction of players in order to be granted a licence.

6. Scientific study

A scientific study will be carried out during two years with the purpose of gathering reliable information on these subjects (fight against money laundering and protection of players).

7. “Regulated and controlled opening”

In an interview to the daily newspaper Le Parisien, Mr. Woerth indicates that, together with Mrs. Michele Alliot-Marie (Minister of Interior) and Mr. Michel Barnier (Minister of Agriculture), he will propose to the President of the French Republic and to the Prime Minister to set up a regulated and controlled opening of the online gambling market.

Mr. Woerth expresses several recommendations in connection with the opening of the French gambling market:

* Horserace betting

- Mutual betting system only (and thus exclusion of fixed-odds betting and bookmakers).

- Players will have to participate to the financing of the State and of the equine sector.

- The horserace betting market should be opened in two successive stages:

First stage: Private operators should be authorized to distribute horserace betting. In this case, PMU retains exclusive rights to organize horserace betting in France and private operators should be approved and have a license.

Second stage (eventually): Private operators are authorized to organize horserace betting. In this case, private operators should be subject to the same requirements and tax treatment as for PMU.

* Sports betting

- Opening of the sector but with a limitation of the forms of sporting bets. The bet must be related to the performance of the athlete. Other bets disconnected from sports (e.g. a bet relating to the color of the tennis player’s eyes), should be prohibited.

- The rights of the organizers of sports events will have to be addressed.

* Casino games

- Blanket prohibition of online slot machines (insofar as they represent a danger in terms of addiction). - Possible opening to the poker and the other traditional casino games.

Taxation

Concerning taxation, the question remains open. Mr. Woerth simply states that the system will have to preserve the financial resources of the State and of the equine sector.

8. Timetable

According to Mr. Woerth, the schedule of the opening belongs to the President of the Republic and to the Prime Minister.

Moreover, he believes that France should not rush into the opening of the market, which could be effective in 2009 or at the beginning of 2010. The Ministry for Budget is much worried about the general budget of the State and thus is less inclined to open the market shortly.

However, Mr. Woerth’s position is not shared by all in the government and especially not by the French President who seems more favorable to “speeding up” the process, especially for reasons relating to the financing of sports.

The question of setting up of a transitional period in between now and the opening, whereby operators could start offering their services on a contractual basis with the government, is also on the agenda but has not yet been decided upon.

Operators are indeed eager to be granted as soon as possible for a limited period of time and have suggested contributing financially to a sports fund. Sponsoring deals with major football clubs are indeed a major concern for operators such as Bwin.

It is expected that the weeks to come will show more visibility on the exact method France intends to use in order to regulate the transitory period.

By Áine Matthews and Deirdre Kilroy of LK Shields Solicitors

The long awaited Irish Casino Committee Report (the ‘Report’) appears to be finally nearing publication and may be published within the next few weeks.

Publication of the Report

It is understood following our conversation with a spokesperson in the Irish Department of Justice, Equality and Law Reform that the Irish Minister for Justice, Equality and Law Reform, Brian Lenihan was ready to publish the Report and formally announce the establishment of an informal all party committee charged with the review of the Report. However, the recent announcement, by An Taoiseach (Irish Prime Minister), Bertie Ahern that he is to step down as Taoiseach and as leader of Fianna Fáil on 6 May 2008 has resulted in a slight delay in the publication of the Report. Brian Cowen, the current Minister for Finance and Tánaiste (Irish Deputy Prime Minister), will be elected Taoiseach on 6 May 2008. As with any Taoiseach’s election, there will be a reshuffle of certain ministries and it is currently unclear whether Minister Lenihan will remain in his current post. Until that reshuffle is announced, it is unlikely that the Report will be published.

Broader Terms of Reference for the Informal All Party Committee

The Irish Casino Committee was tasked with preparing a report on the regulation of casino style operations in Ireland. However, it is expected that the Report will cover many different areas of gaming and gambling in Ireland including fixed odds betting terminals and internet gambling. The informal all party committee which the Minister for Justice, Equality and Law Reform will soon announce is expected to be given broader terms of reference. We understand that the position has shifted from ‘how best to regulate casinos in Ireland’ to ‘how best to regulate gaming and gambling in Ireland’.

Comment

It this is the case, this new position is very much to be welcomed. The main legislation in Ireland governing gaming and gambling has not been substantially overhauled since the middle of the last century. It does not address modern technological developments. Attempting to navigate and interpret such legislation is difficult and indeed frustrating for both existing operators and new operators considering entering the Irish marketplace. No doubt, clarity on the area will be welcomed by all in the industry. However, it looks like the timetable for progress is somewhat uncertain for the moment.

 

Schleswig-Holstein; The new Hope?

by Attorney-at-Law Martin Arendts, M.B.L.-HSG

The Christian Democratic Party (CDU) in the parliament of the State of Schleswig-Holstein wants to open the market for sports betting to private operators by introducing a new licensing model. With this in mind, the Christian Democratic Party proposed a dual interstate treaty system dealing with lotteries and sports betting separately.

According to a proposal elaborated by Hans-Jörn Arp (CDU), private operators are to be licensed on conditions regarding the protection of minors and addiction prevention. Operators are to add warnings about problem gambling on the slips. A system of limits is to restrict the amount of the wager and a special file restricting addicts from betting is to be installed on a federal level. The states were to profit from this model as well. Private operators are supposed to pay a part of their revenues as license fees to the states. The money could then be used to “fund public or tax-deductible goals”.

The Christian Democratic Party plans to introduce its draft for parliamentary debate after consultations with its coalition partner, the Social Democratic Party (SPD). The proposals could thus become integral part of a new Interstate Treaty, which could already be introduced for the conference of the state prime ministers in Berlin on 22 March 2007.

Hans-Jörn Arp, member of the Schleswig-Holstein parliament, spoke out very critically against the draft for a new Interstate Treaty on Gambling as proposed by the other states. He already fears that the state Toto- und Lottoblock could break apart: “After the evaluation of the draft of the Interstate Treaty more and more former advocates of the monopoly start to understand what a bad deal this is. The unity of the Toto- und Lottoblock (association of state operators) regarding this Interstate Treaty is about to break apart. And rightly so: the new Interstate Treaty on lotteries destroys our developed lottery system more severely than any licensing model ever could.” The CEO of Lower Saxony’s Toto-Lotto, Rolf Stypmann, had summed it up very precisely: Due to the new Interstate Treaty on Gambling Lotto and Toto are threatened with extinction because of the monstrous and impracticable regulations. He almost felt stigmatised as a drug trafficker. Even old and established Toto was now considered dangerous. Hereto Arp: “Against this background, it would be more than understandable, if the Toto- und Lottoblock will refuse to offer sports betting in the future. But this also means: The states’ revenues from levies and fees will drop as dramatically as the means for the funding of culture and sports.”

The Gordon Moody Association (GMA), one of the UK’s largest gambling support charities, today announced the launch of the first ever live multi-lingual service on its Gambling Therapy e-helpline which offers online contact with trained advisors, forums and support groups. The online service will open up the issue of problem gambling to all ethnic groups and cultures in the UK and around the World.

Launched ahead of the Government’s new gambling licensing laws due later this year, the service which goes live on Monday 12th March 2007, will be manned by a highly trained team of counsellors and advisors. Uniquely, the multi-lingual team will be able to translate and offer help and advice to emails in 13 different languages, with support for more languages imminent.

Kevin Farrell-Roberts, Chief Executive of the GMA, formerly the Gordon House Association, commented, “Problem gambling is a widespread issue that unfortunately suffers from a lack of internationally-accessible support. The launch of our multi-lingual service brings the GMA to the forefront in providing help to cultural groups that have previously had no access to gambling support. Our extension of support will help more people across the globe who are affected by problem gambling.”

As part of this initiative, the GMA, together with existing supporters such as Betfair and William Hill, is calling for widespread international adoption of responsible gambling measures. Through the inclusion of the GMA’s STOP! sign, an online link to the Gambling Therapy e-helpline, online operators can help showcase their support for the cause.

Michael J. Garcia, the United States Attorney for the Southern District of New York, and Mark J. Mershon, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation ("FBI"), confirmed on Tuesday 16 Jan that Stephen Lawrence and John Lefebvre were arrested on Monday 15 Jan on charges of conspiring to transfer funds with the intent to promote illegal gambling.

Lawrence and Lefebvre had both resigned their positions at Neteller, Lebebvre left Neteller in December 2005 while Lawrence left in October last year, just after the passing of the Unlawful Internet Gaming Enforcement Act

Neteller have released a statement on the Arrests

The full announcement from the US DoJ is Here

And They're Off!

If you are planning to continue operating a gambling business after 1 September 2007, you should be preparing your gambling licence applications as soon as possible.

2007 will see the long awaited overhaul of UK gambling industry regulation with the commencement of the Gambling Act 2005 (the Act). As you will no doubt be aware, the Act is set to come into force on 1 September. Although this may still seem a long time away, those who wish to continue operating after 1 September 2007, without interruption, are required to submit their licence applications prior to April 2007 in order to guarantee a decision before the new Act comes into force. Applications are detailed and time consuming and operators seeking a smooth transition to the new regime are advised to begin making preparations now.

Carl Rohsler, Partner, and head of Gambling group, Hammonds, summarises the application process Here.

Bryan Bailey of Casinomeister.com comments in his most recent bulletin,

Complaints in Casinomeisterland

It seems as though casino complaints are going through the roof. I could understand this if traffic was going through the roof as well - (unfortunately) it's not. Traffic is pretty much the same as it was prior to the passage of the UIGEA.

It's alarming. Some people consider Casinomeister to be a good place to get the "pulse" of the industry - if this is the case, then we need a paramedic. I used to have casinos lining up wanting to get on board as Casinomeister "Accredited Casinos", now they seem to be lining up to get into the coveted "rogue section". Several casinos have been rogued this week. 32Vegas, and the entire MiniVegas Casino Group. There are a few more cases of pending roguedom, but we'll cross that bridge when we get there.

Please don't get me wrong, I absolutely hate roguing casinos. It sucks - but I feel obligated to my visitors and Casinomeister members to let them know what's up in online casinoland. If players need to be warned, then I'll warn them.

My good friend, Ted Loh, brought up a few good points about this sudden increase in player complaints. He came up with the following:
It makes you wonder if the UIGEA is having intended/unintended side effects of:

1. Giving operators an excuse to stiff or cheat US players
2. Driving certain operations into dire financial circumstances because of a huge US player base
3. Causing software providers to create even more cover for their operations, and/or stalling while they figure out what to do next

IMHO, some of what's been happening lately may be just pure coincidence - either that or we've been under a full moon for a few months - but it seems that there has been a significant increase in problems across the board lately.

What is really bothering me is that we are seeing more instances of confiscated winnings, locked accounts, and accusations of bonus abuse. What ever happened to "pay the player - then lock the accounts" of unwanted "bonus players"? This was a mantra for respectable casinos, but it seems to be thrown to the wayside during post UIGEA.

I really hope that operators consider their role in this industry as a long term commitment of respectability. And I hope that they stay on a firm path of treating players with due respect and fairness. To treat players with contempt will undoubtedly have negative consequences in the future.

Planned Interstate Treaty on Lotteries fails -

Unanimous resolution of the parliament of Schleswig-Holstein hinders signing on 13 December 2006

by Attorney-at-Law Martin Arendts, M.B.L.-HSG

On the occasion of their last meeting in October 2006 the prime ministers of the 16 German states (Länder) discussed the draft of the new Interstate Treaty on Lotteries (which regulates also betting and is supposed to include provisions concerning casinos as well). The initial plan to finally sign the controversial treaty on 13 December 2006 already is now on the brink of collapse.

On 29 November 2006, the parliament of Schleswig-Holstein unanimously, with the votes of all parliamentary parties, voted to postpone the decision on the draft of the new Interstate Treaty on Lotteries (Lotterie-Staatsvertrag). The state parliament called on the state prime minister Peter Harry Carstensen to plead for a prorogation of the decision due to the need of considerable legal clarification.

The draft was blamed to massively violate Community law, constitutional law and anti-trust law. The state parliament’s finance committee pointed out in one of last week’s motions that the planned interstate treaty to all appearances violated Community law.

One should at first wait for the ECJ’s Placanica decision concerning the sports betting  and lottery system, presumably due in spring of 2007, as well as the evaluation of the hearing of the companies and associations concerned which took place following the last meeting of the state prime ministers. For the rest it was referred to the Federal Cartel Office’s (Bundeskartellamt) decision, which had established a violation of anti-trust law. In the view of these legal faults, the parliamentary leader of the Christian Democratic Party Dr. Wadephul spoke of a “political incapacity of the states”. One had to fear a flood of lawsuits and a “years long state of legal uncertainty”, not without any reason by the way.

Therefore the Treaty has failed at the moment, since the unanimous vote of all 16 German states is necessary for passing the Interstate Treaty. The provision initially incorporated in the draft which asked for the approval of only 13 of the 16 states is illegal (and would lead to an unacceptable diverging legal situation in Germany).

The failure of the current extremely controversial draft is not the end of the world, but hopefully leads to a founded legally tenable regulation. Due to the Federal Constitutional Court’s (Bundesverfassungsgericht) decision of 28 March 2006 a comprehensive regulation of the gambling sector has to be achieved next year, since the transitional period established by the Constitutional Court ends at the end of 2007. The requirements set forth by the Federal Constitutional Court as well as those set forth by the ECJ should be incorporated. For the rest, the necessary comprehensive regulation has to be in conformity with German and European Anti-trust laws. According to Dr. Wadephul taking into consideration their different addiction potential the new regulation should make a difference between lotteries and sports betting. For the rest, state and private operators should not be treated differently without comprehensible reasons.

Peter Dicks, the Non-executive Chairman of Sportingbet, until his resignation on 14 September, has been permitted to retun to the UK after his bail conditions were extended at a hearing on 14 September in New York. The hearing which was to consider Dick's extradition to Louisiana was adjourned until 28 September after New York Governor George Pataki's office withdrew a governor's warrant necessary to transfer Dicks to the State of Louisiana. Dicks was detained at JFK Airport, New York, on 6 September by officers of the Port Authority of New York, whilst travelling from London to the US on non-Sportingbet related business. Dicks attended a hearing in New York City at which he was served with a warrant for his arrest initiated by the Louisiana State Police for the alleged violation of Louisiana State laws relating to gambling by computer (LAR.S. 14:90.3(E), Gambling by Computer). The charge is levelled against Dicks by name. In an official statement the Sportingbet Group said that 'it had not received correspondence from any US authority regarding this or any related matter'. The Company said it was 'closely monitoring the situation and will continue to operate as normal'. Louisiana legislation : http://www.legis.state.la.us/lss/lss.asp?doc=78701

Peter Dicks, the Non-Executive Chairman of Sportingbet Plc, was detained by US Authorities at approximately 2.00am BST on Thursday, 6 September 2006 according to an official statement issued by Sportingbet. Pending clarification of the situation the Sportingbet Board has sought immediate temporary suspension of Sportingbet's shares.

Dicks, aged 64, who was visiting the US on non-Sportingbet business joined the Group in January 2000 as Sportingbet Plc's Non-Executive Chairman. Dicks is the Chairman of Private Equity Investor and director of various UK and US companies including Polar Technology Trust and Standard Microsystems (NASDAQ). Previously, Dicks was a founder of Abingworth Plc, which specialised in private equity investments. A hearing for Dicks is scheduled for 2.00pm Thursday , 6 September BST.

Emergency Briefing:

Online Gambling & the US

4 August 2006, London

World Online Gambling Law Report is organising an Emergency Briefing to analyse the legal background and significance of the recent action taken by the US authorities.

The Briefing will be held in London in the next two weeks.

The Briefing will analyse the 22-count indictment charging 11 individuals, including David Carruthers, CEO of BetonSports, and four corporations, including BetonSports, on various charges of racketeering, conspiracy and fraud.

The Briefing will also consider the significance of the temporary restraining order issued by Judge Catherine D Perry ordering BetonSports PLC to stop taking sports bets from the United States and to return money held in wagering accounts to account holders in the United States.

U.S Attorney Catherine L. Hanaway of the Eastern District of Missouri warned in a US Department of Justice press release on 17 July: "Misuse of the Internet to violate the law can ultimately only serve to harm legitimate businesses. This indictment is but one step in a series of actions designed to punish and seize the profits of individuals who disregard federal and state laws."

The Emergency Briefing will also consider the issue of extradition in the light of the US action and recent extradition cases.

The Briefing will also look at developments in Congress, as the Unlawful Internet Gambling Prohibition and Enforcement Act of 2006 heads to the Senate after its passage through the House of Representatives.

Venue: TBA, Central London

Date: Friday 4 August 2006

If you or a colleague would be interested in attending the Emergency Briefing or If you would like any further information, please contact:

Dan Towse

Sales Manager

World Online Gambling Law Report

email: dan.towse@e-comlaw.com

Tel: +44 (0)20 7012 1381 fax: +44 (0)20 7729 6093 email: dan.towse@e-comlaw.com

The arrest of David Carruthers, Chief Executive Officer of AIM listed BetonSports, while in transit in Dallas from the UK to Costa Rica and a 22-count indictment charging 11 individuals and four corporations, including BetonSports, on various charges of racketeering, conspiracy and fraud has caused consternation and alarm in the online gambling sector.

Carruthers, a UK citizen who is a well respected figure in the UK gambling world, became Chief Executive Officer of BetonSports in June 2004 as the Company prepared to list on the London AIM market. Fellow Directors include The Lord Glentoran, the Conservative Shadow Minister for Northern Ireland and Sport.

A federal grand jury in the Eastern District of Missouri returned the indictment on June 1 but it was only unsealed on the arrest of Carruthers.

The Department of Justice also announced that: ‘in conjunction with the indictment, the United States has filed a civil complaint in federal court to obtain an order requiring BetonSports PLC to stop taking sports bets from the United States, and to return money held in wagering accounts to account holders in the United States. U.S. District Judge Catherine D. Perry issued the temporary restraining order on July 17. A hearing in the civil case has been requested within 10 days. As authorized by federal statute, the FBI is issuing letters to four telephone companies, instructing them to stop providing phone service to the Internet sportsbooks and casinos operated by BetonSports PLC’.

Unlike the UK, where the Gambling Act 2005 provides for the licensing and regulation of remote gambling, the US Department of Justice holds the view that internet gambling is illegal. The Department of Justice view has not always been supported in the US Federal Courts.

On July 8 the US House of Representatives passed a Bill, The Unlawful Internet Gambling Prohibition and Enforcement Act of 2006 which will now move onto the Senate for further consideration. The Bill is unlikely to make it through the Senate as the mid-term elections are set for November and the Summer recess starts at the beginning of August.

Online gambling operators have always held to the view that gambling takes place where the bet is accepted. BetonSports is licensed by Antigua and holds that its business is legal and regulated.

Antigua & Barbuda took a case before the World Trade Organisation (WTO) Dispute Resolution Panel arguing that the United States was violating its commitments under the General Agreement on Trade in Service (GATS) by not providing market access and/or national treatment under GATS to internet gambling service operators licensed by the Government of Antigua & Barbuda.

The WTO Dispute Resolution Panel released a confidential report to the WTO Member State Parties in the WTO dispute, United States -Measures Affecting the Cross-Border Supply of Gambling And Betting Services WT/DS825 at the end of March.2004. The report found that the US was violating its commitments under GATS.

In April 2006 the US claimed to be in compliance with the WTO ruling, a claim rejected by the Antiguan Government and the case looks set to run for some time.

On Sunday night at 11 pm at a US airport, while in transit with his wife from the UK to Costa Rica, David Carruthers, Chief Executive Officer of BETonSPORTS, was asked to go with officials of the US Federal Authorities.

His wife continued on her journey to Costa Rica. David is understood to be still with the Federal Authorities.

BETonSPORTS issued the following statement on Monday 17 July.

'While changing flights in the USA en route from the United Kingdom to Costa Rica, David Carruthers, Chief Executive of BETonSPORTS plc was detained by US federal authorities.

The Board are currently seeking clarification as to the basis of the Detention and a further announcement will be made when appropriate. The business continues to trade normally. In particular, the Antigua-licenced gaming activities serviced in Costa Rica and Kuala Lumpur are operating as usual.'

No statement has yet been issued by the US Government.

David is a high profile proponent of the regulation of gambling by the US Government. In April this year, David took part in an online debate with Representative Jim Leach (R-Iowa), one of the sponsors of legislation to prohibit internet gambling, on the Wall Street Journal Online.

On Friday 14 July David was quoted by Reuters saying that he believed that "the likelihood of the Bill (The Unlawful Internet Gambling Prohibition and Enforcement Act) passing the Senate is remote".

BETonSPORTS listed on the London Stock Exchange’s Alternative Investment Market on 15th July 2004 (LSE: BSS.L) raising 54.6 million GBP ($101 million USD), one of the largest floats of that year.

BETonSPORTS gaming volume for the last financial year was $1,774.3m, with a gross margin of $84.6m. Profit before tax after exceptional items $14.9m.

David's official biography emphasises his commitment to an ethical approach to online gambling. His official biography is below:

"As Chief Executive Officer of BETonSPORTS plc and Managing Director of its UK subsidiaries, David Carruthers is responsible for the company’s overall corporate strategy, organizational development, licensing agreements and legal matters.

Since July 2000, when David Carruthers joined BETonSPORTS plc, he has spearheaded the rapid growth of BETonSPORTS in the period prior to a public listing which includes brand acquisitions, a 300 percent increase in profits, a 100 percent increase in call center capacity and increasing Internet traffic to 81 percent of the total business.

Carruthers, who has more than 30 years of experience in the industry, runs BETonSPORTS with a distinct business strategy; he promotes and integrates a commitment to ethics as the best way to attract and retain customers and investors. In doing so, he is shaping a new paradigm for the online gaming industry that he also believes can reshape America’s attitudes towards the industry.

Carruthers maintains that in order to thrive on the Internet, businesses must be based on an even more rigorous platform of trust and integrity than traditional companies. This means that BETonSPORTS staff is trained to relate to customers in ways that protect customer interests and build trust. Privacy is safeguarded; excess behaviors are curbed, habitual-customers in need of support are provided a way to seek help if necessary; screening is in place to confront underage gambling.

By seeking to attain the highest quality of integrity and transparency, Carruthers believes that not only is BETonSPORTS doing the right thing for its customers, but also the right thing for the industry. He maintains better business practices pave the way for better relationships with governments and regulatory authorities.

Mr. Carruthers is an MBA graduate of the University Wolverhampton, England."

More Reading:

US Department of Justice Press Release Monday July 17

United States Attorney's Office, Eastern District of Missouri

BETonSPORTS indictment (PDF)

BETonSPORTS temporary restraining order (PDF)