The future of all unlicensed forms of internet gambling - from poker to horse racing bets - in at least seven US states was under threat last night after it emerged that the arrest of Peter Dicks, Sportingbet's British chairman, on Thursday morning at New York's JFK airport was linked to Louisiana state's wide-ranging laws against gambling by computer.
Most legal experts had, until yesterday, seen the federal Wire Act 1961 as the main threat to internet gaming operators targeting US customers. But several states, including Louisiana, have more up-to-date laws, more suited to the internet age.
Sportingbet said yesterday that Mr Dicks had been arrested on allegations relating to the company's possible breaches of a Louisiana statute on "offences affecting general morality". In a statement to the stock exchange, it said all of its sports betting, poker and casino websites would "continue to operate as normal". Its shares remained suspended yesterday.
Mr Dicks told a US court yesterday he intended to fight extradition to Louisiana. A spokesman for the district attorney in the New York borough of Queens said of Mr Dicks: "He plans to challenge extradition on the grounds that he was not personally in the jurisdiction in the period of the offence."
Mr Dicks was granted bail last night on surety of $50,000 by a judge in New York's supreme court. The decision meant he walked free after two nights in New York's Rikers Island prison, a vast complex holding 15,000 inmates. He must surrender his passport and remain in the New York City area pending a decision on his extradition to Louisiana.
Mr Dicks is believed to have been in the US to attend a board meeting of another company of which he is a director. His listed directorships include Standard Microsystems, a New York maker of computer circuits.
If convicted, Mr Dicks could face up to five years in jail with hard labour and a fine of up to $20,000. The offence, which was updated by lawmakers three years ago, is aimed at those connected with internet sites that "conduct as a business ... any game contest, lottery, or contrivance whereby a person risks the loss of anything of value in order to realise a profit".
It is understood that there are a number of warrants outstanding under the Louisiana laws for other individuals. Andy McIver, Sportingbet's finance director and chief executive designate, said: "Until this is resolved I won't be travelling to the US ... The Louisiana laws involved are incredibly wide-ranging. It covers practically any form of doing anything involving any sort of gaming and a computer."
Last night several London-listed gaming groups said their lawyers were assessing the implications of this law. Legal experts had said online gambling operators in the US who avoided sports betting, in particular taking wagers by telephone, were less likely to be in breach of the Wire Act. Casino and poker website operators such as PartyGaming and 888 have always maintained that they were not in breach of the act.
However, both said in their flotation prospectuses that their activities could violate some state statutes. PartyGaming's float paperwork last year made clear that its activities "may violate state law and violations of state gaming laws can serve as a predicate offence for liability under federal statutes". The document also suggests Louisiana state prosecutors might have had the company in their sights.
"In January 2005, an email was sent to PartyGaming's customer service department requesting, on behalf of the office of the Louisiana attorney general, that PartyGaming cease and desist from offering its services to persons within the state," it said.
Directors told investors they had "no knowledge of the legitimacy of the email" and would dispute the jurisdiction if a legal challenge was pursued. "Accordingly, PartyGaming has not responded to or sought to determine the legitimacy [of the email]."
Prosecutors in Missouri said this was unrelated to a federal case being brought against BetonSports. Three months ago David Carruthers, its chief executive, was arrested and charged in relation to Wire Act, racketeering, fraud and other alleged offences in Missouri. Mr Carruthers has denied the charges.