US authorities detained a second Internet gaming executive today and sparked share price falls that wiped over $1.5 billion off the market value of the sector.
Online bookmaker Sportingbet said its chairman, Peter Dicks, had been detained by US authorities - a move that mirrored the detention in July of another online gaming CEO on racketeering charges.
Shares reacted instantly across the $12 billion-a-year industry, with industry leader PartyGaming plunging as much as 19 per cent, 888 Holdings down as much as 18 per cent and Playtech down as much as 17 per cent.
Shares in Austria's bwin.com Interactive Entertainment also slumped.
"This arrest highlights the US Department of Justice is going after online gaming companies by arresting their board members," said a London analyst.
Sportingbet said it had sought immediate temporary suspension of its shares pending clarification of the situation. Mr Dicks was arrested early this morning and his hearing is scheduled for this afternoon.
Analysts said Sportingbet's US-focused sports betting business was similar to that of Betonsports, whose chief executive, David Carruthers, was arrested in Texas in July.
Mr Carruthers and seven others pleaded not guilty to racketeering and other charges. The Costa Rica-based company has since said it is closing its US business.