Exclusive Interview: David Carruthers (Part 1)
In his first interview as a free man, former BetOnSports CEO David Carruthers talks to James Bennett about life during and after his apprehension and subsequent 42-month house arrest, US politics and how running saved his sanity.
“We wanted to become the Coca Cola of online gaming. That would have been a nice achievement,” says former BetonSports CEO David Carruthers, reminiscing on the last six years of his life from a leather armchair in London St Pancras station’s former ticket office, now a refurbished, plush hotel bar, far from the surroundings in which he was forced to become accustomed to between 2006 and 2011.
“I read about this place on the internet when I first got out. I plan to stay here at some stage. It’s such a great story,” says the articulate 55 year-old in his Edinburgh accent.
But the transformation of the Renaissance Hotel is nothing compared to his story.
He, like many pioneering egaming CEOs in Costa Rica and other offshore locations that set up and were employed to work for licensed and unlicensed US-facing gaming businesses in the early 2000s, dreamt of taking the platform they had built from scratch to one day going public and, as revenues sky rocketed, into the realms of regulatory acceptance.
But despite numerous public appearances, debates on national radio stations and column inches in nationwide newspapers including the Wall Street Journal from the likes of Carruthers and former Sportingbet chief executive Nigel Payne, the US Department of Justice refused to listen to the plight of the egaming industry.
From as far back as 2002, Carruthers says he tried to convince the US authorities to legislate “because I could get column inches in real newspapers, further the debate and progress the industry, and allow it to mature and come out of the shadows”. He adds it would have been not only a great success for BetonSports’ shareholders and for him personally, but also for the United States economy.
“The only other person to approach it in that way was Nigel [Payne] and he had some success as well. They [Sportingbet] ran their ads in the Washington Post. I think it said ‘Please sir can we pay our tax?’, which was quite funny, and then they gave a fictitious tax bill of what the industry might pay if the government saw sense and acted in a grown up way,” he recalls.
But the US authorities, much like they do today following the Black Friday indictments, arrests and prosecutions, had other ideas, according to the Scot, that were set in stone long before he and others began to call for the regulation and taxation of online gambling. It was not about him or Gary Kaplan “ the man who hired him “ nor was it about BetonSports. In Carruthers’ view, it was, and still is, about politics and money. And he, and other individuals that have since been pursued and apprehended, have happened to be standing in the federal government’s path.
From receiving a phone call from Kaplan in Costa Rica in 2000 while in his 24th year at Ladbrokes “ Carruthers recalls having to buy a map at the airport to discover where the Central American country was before flying out to visit “ to accepting the job and building up and floating the firm in 2004 and handling almost US$2bn worth of bets in 2006, he would find himself in leg irons in a Texan prison in July the same year.
“What happened was tragic for me personally but the implications were much broader than me. Some 2,400 people lost their jobs and that was terribly sad because they were all good people doing an honest day’s work in the interest of the business and the shareholders and customers. Ultimately, they also lost out because of a move from the US government, which could have been finessed in a much better way with a similar outcome,” he says in his first interview since finally being able to call himself a free man in the summer of this year.
“As a CEO of a public company, had I received a request to cease and desist, I would have had to abide by that. That is the one thing that perplexes me as to why that didn’t happen, and that just raises questions about the political interests and motivations.”
“I was lucky”
The mild mannered, now consultant and entrepreneur “ someone you would likely pass in the street without batting an eyelid “ was not just one of the first gaming CEOs to conquer the US market, but equally one of the first, alongside Kaplan, to be arrested for allegedly contravening US laws.
Arrested by federal agents while with his wife Carol at Dallas-Fort Worth International Airport in Texas on 16 July 2006, Carruthers was immediately taken to a local prison. Four days later, he refused a bail hearing asking for his conditions of release to be discussed in the jurisdiction of East Missouri, where he was charged under the Racketeer Influenced and Corrupt Organisations Act (RICO).
He pleaded not guilty and a $1m bail bond was set. Just under a month from the day he was apprehended he was electronically tagged and released under an initial 24-hour house arrest within a local St Louis hotel that he would call home for the next three years.
Fortunately, something was to come to his aid that would both clear his mind and save his sanity, but also allow him to publicly show the outside world just what he was made of.
“I was allowed out for an hour a day and to preserve my sanity I went to the gym and used to walk on the treadmill. As I did that I walked and walked and walked, and the pounds began to drop off and I got fit. I got so fit that I got bored with walking and I one day began running, so much so that I ran five miles.
“That got me thinking. I can’t talk to the media but they can see what I’m doing and anything positive out there can impact on a potential jury and the judge’s potential impression of who I am as a person.”
Running, however, became more than just a daily routine. After a year of clocking up the miles, Carruthers went online in his room in December 2007 and, in his own words, “crazily” applied to run in the St Louis marathon. Gradually, his house arrest hours were softened from one to two hours a day, followed by two periods of two hours a day and then finally to three different splits of one hour, two hours and three hours. This became so relaxed that he was able to develop a schedule, which he would send to his pre-trial officer for approval.
“He and I used to get on great,” Carruthers recalls, adding: “I used to email him and if I needed an extra hour, if I was going to dinner, a show or a race meet, I got it.
“I was as free as they would let me be. I mean, they let me go to Memphis to run a marathon. That’s a 600-mile road trip there and back accompanied by a friend. I was still tagged but it didn’t work, it only worked within range of the box,” he laughs.
Carruthers’ running became so important to him that he is now classed as “elite”, and he still holds the St Louis state 1,500m record for his age group. More importantly, however he was able to clear his mind from what he describes as the “angry early days”, work solidly on his defence for two years and settle in for the long haul “ something he was prepared to do after hiring one of the best defence lawyers in town, Scott Rosenblum, otherwise known as “Scott free”.
“Do I feel bitter and twisted? I got over it a long time ago,” he says. “In the early days I was angry and ran miles venting my anger on the footpaths of St Louis. I just vented it away because you can only deal with what you have some control over. I was lucky. I had the best legal advice in the state of Missouri, an amazing guy and a huge personality.
“His advice and guidance to me was invaluable, and worth every penny. He took me into his home for Christmas dinner for four years and I became a friend of the family.”
The long haul turned out to be longer than anyone expected “ 42 months “ costing Carruthers a sixfigure sum and virtually all his earnings. “Those 42 months didn’t count for anything,” he reflects. “That’s nearly four years of my life with complete restrictions over seeing my family, being free and working. I could see them when they could afford to come and visit me, time or expense.
“I saw my daughter once and my son twice in four years. My wife was only allowed to stay in the country under the terms of a visitor’s visa so she’d come for three months and go home for three months and carry on. And remember, throughout all of that, until the last six months, I had no idea what the outcome would be. I was looking at possible multiple terms of 20 years imprisonment.”
This is part one of a two-part interview originally featured in the print issue of eGaming Review. The second segment will be published online tomorrow, while an e-edition of the full article is available here.