By Rich Miller
July 22, 2006
The U.S. crackdown on online gambling company BetOnSports appears
unlikely to spark dramatic shifts in the geography of the online
gambling industry in the short term. American DNS service providers
and DDoS mitigation companies are continuing to provide services to UK
betting sites, while initial fears about the British government's
extradition policy have eased somewhat. But some international betting
services are barring U.S. residents, and up-and-coming offshore "data
havens" are likely to be of growing interest to UK-based gambling
It will take time for the broader implications of the U.S. charges
against BetonSports.com to become clear. BetonSports.com CEO David
Carruthers was arrested Sunday in Dallas/Fort Worth airport as he
changed flights on his way from London to Costa Rica (where
BetOnSports is based) and charged with conspiracy, fraud and
racketeering. Also named in the indictment were Florida companies that
provided marketing services to BetonSports. While those charges dealt
specifically with the transport of gambling equipment to offshore
sites, the inclusion of the companies has raised concern among U.S.
companies providing services to international gambling sites.
Neustar Ultra Services (formerly UltraDNS), provides DNS management
services to BetonSports.com and several other UK gambling sites, and
said Friday that the U.S. action against the company has not changed
its practice. "We will continue to support our partners, and will do
so according to U.S. government law, however it shapes up," said a
spokesman for the company, which is based in Sterling, Va. "We support
plenty of gambling sites, but also many customers in other industries
as well." Prolexic, a Florida provider specializing in mitigation of
DDoS attacks, also counts offshore gambling web sites as customers.
Gambling sites are frequest targets of attacks from DDoS blackmail
For the moment, betting sites are focusing on building a more
international client base to reduce dependence upon American bettors.
Several international gambling web sites have informed U.S. players
that they will no longer accept their bets in the wake of the U.S.
crackdown on online gambling company BetOnSports. UK betting site
Coral Eurobet has begun closing accounts of U.S. resident, while
PokerChamps.com, a site owned by Danish poker champion Gus Hansen,
said it will begun using using geo-location software to deny U.S.
residents the abuility to place bets on its site.
Executives of UK gambling companies are also avoiding any travel to
the U.S. - a development which led to the cancellation of a major
industry conference scheduled for this weekend in Las Vegas.
Carruthers' arrest, combined with the recent extradition of three
UK-based executives of NatWest bank to face charges in America, had
raised anxiety that the UK might become an untenable location for
online betting firms.
The UK government has indicated that extradition would only be
considered if conduct is illegal in both the UK and America. But some
industry watchers noted that the the indictment against BetOnSports
includes allegations of tax evasion, which leaves open the prospect of
an extradition of a UK gambling executive based on tax-related
Many UK betting sites continue to host in London-area data centers.
With many theories and rumors fueled by FUD (fear, uncertainty and
doubt), offshore destinations are aggressively seeking to attract
online betting sites.
Chief among these is the Isle of Man, an island off the British coast
which actively encourages the development of gambling and e-gaming
business. Last week Netcetera became the latest company to announce a
new hosting facility on the Isle of Man, announcing plans for a $15
million data center that will open in September 2006. Netcetera says
the new center near Ronaldsway Airport will be the isle's largest,
with enough space to accomodate 700 server racks.
Among the companies already based in the Isle of Man are gaming web
site PaddyPower and the Neteller payment processing service. Other
hosting locations commonly used by gambling sites include the Channel
Islands, Gibraltar, Malta, and Antigua.
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