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 operations.
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) is continuing to provide DNS management services to BetonSports.com and several other UK gambling sites. Prolexic, a Florida provider specializing in mitigation of DDoS attacks, also counts offshore gambling web sites as customers. Gambling sites are frequent targets of attacks from DDoS blackmail schemes.
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 ability 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 charges.
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.
Posted by Rich Miller in Around the Net
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