Almost immediately after the news broke Monday morning that BetonSports (BoS) CEO David Carruthers had been arrested by U.S. officials, online gaming stocks began to plummet, losing a total of nearly £300 million in value before the facts of the arrest had been brought to light.
Carruthers' arrest came out of a sealed indictment issued by a federal grand jury in the Eastern District of Missouri that charges Carruthers and 10 other people, including BoS founder Gary Kaplan, with conspiracy, racketeering, tax evasion and fraud in offering illegal bets on professional and college sports to U.S. residents.
By Monday afternoon, BoS shares had fallen by 30p (more than 20 percent), while Sportingbet fell by 34p (more than 10 percent) and PartyGaming fell by 8p (7.5 percent). Trading of BoS shares has since been suspended at the request of the company.
Amid growing fears of a sweeping crackdown on Internet gambling in the United States, gambling stocks continued to slump today. Sportingbet was the biggest loser, dropping 100p to 182p (a 35.5 percent decline).
Meanwhile, PartyGaming' decline today from 103p to 85.25p (17 percent) was a major contributor to a 0.3 percent decline in the FTSE, which closed at 5,681p.
Others hit hard include 888 Holdings, which ended today's trading at 168.50p (down 12.7 percent from yesterday's 193p close), and Empire Online, which closed at 68.50p (8.7 percent lower than yesterday's closing price).
Providers in the I-gaming space are not immune to the effects of the shakeup. Online gaming software developer Playtech Ltd., for example, dropped 84 points (28 percent) today, from 298.50p to 214.50p.
Emily Swoboda is the senior staff writer at IGamingNews. She lives in St. Louis, Mo.