fires jailed boss

The company at the centre of a US online betting scandal is distancing itself from its founder and has sacked its chief executive, who was jailed last week for heading the company. has released statements to the London Stock Exchange, where its shares are listed, distancing current management from the scandal-hit founder and the chief executive.

British businessman David Carruthers was arrested in Texas last week as he changed plane to go to Costa Rica. He remains in jail on charges related to his heading of the online betting company. Online betting is illegal in the US under the 1961 Wire Act and a further piece of legislation outlawing the use of credit and payment cards for online gambling is awaiting Senate approval.

"Clearly while he remains in the custody of the US government he is unable to perform his duties," the company was widely reported to have said in a statement. The removal of Carruthers was "as a consequence of [his] continued detention by US authorities," it said.

The company has also moved to disassociate itself from its founder, Gary Kaplan. Weekend newspaper reports recounted allegations that the company had held wild parties at its Costa Rican base involving prostitutes and that it encouraged gamblers to spend when they said they could not afford it. The Mail on Sunday quoted sources alleging that Kaplan was a key organiser of the parties.

"The Board wish to make absolutely clear that none of the founders of the original business has any continuing role within the Company," said a statement to the London Stock Exchange.

"As disclosed in the AIM [pre-flotation] document, the original founder has a consulting agreement with the Company under which his role is non-management related which was an absolute requirement of the Board for the float and thereafter," it said.

The company shares were suspended on Carruthers' arrest last week. The company was bought by its present owners just before the July 2004 float, it claimed. "Other than David Carruthers the Board of directors, both executive and non-executive directors, was appointed at or subsequent to the float and are not named in the indictment."

The legality of online betting in the US has never been entirely clear cut, which is a situation the new planned legislation hopes to address. It has been passed in the House of Representatives and must now be passed in the Senate before it can become law.

The $12 billion a year online gambling industry is said to earn around half of its revenue in the US. Since Carruthers's arrest net betting shares have tumbled; in the days after the arrest the firm's rival PartyGaming saw its shares drop by 17%.