Bodog Entertainment Group, an operator of several online gaming sites, said on Thursday it had cancelled an internet gaming conference set to kick off next week in Las Vegas following the US government crackdown on operators of gaming sites.

“The US government has made it clear that anybody that’s involved in internet online gaming is not welcome in the US,” said Calvin Ayre, Bodog’s founder and chief executive, in an interview from San Jose, Costa Rica.

Shares in online gaming sites plunged earlier this week after David Carruthers, the chief executive of Betonsports, was arrested after landing at a Texas airport. He is to face racketeering charges for taking online bets from US customers.

Mr Ayre said conference attendees had begun to cancel their travel plans amid fears of further arrests. He added that the conference would be rescheduled “in an international location” at a later date.

Meanwhile, the lawyer for Mr Carruthers, said he did not expect the BetonSports chief executive to be granted bail under conditions that would allow him to return to the UK at a hearing due in Fort Worth, Texas, on Friday.

He believed his client would have to remain in the US while awaiting trial and might have to wear an electronic tag if he was released.

“I think the government’s position is going to be that the offence for which he is charged in the US is not an offence in the UK,” said Tim Evans, the BetonSports chief executive’s lawyer, in Texas on Thursday.

“I don’t know if that’s an absolute bar to extradition, but as a practical matter that would mean he couldn’t be extradited if he went back.”

Mr Carruthers was due to make his first appearance before a US court today to hear the crimes he is charged with, likely to include racketeering, conspiracy and fraud.

Mr Carruthers was “doing OK under the circumstances,” Mr Evans said. “He’s a very intelligent person and he realises that, at least temporarily, there’s not anything he can do about it.”

Mr Evans said that while he was not aware of a specific precedent for the case, he noted that the government did not request the detention in jail of three former Natwest bankers from the UK recently extradited to the US for their supposed role in fraud at Enron. They were granted bail last week by a court in Houston.

Internet gambling on most sports is illegal in the US, and as a result many online gambling companies, much of whose trade originates in the US, have set up offshore centres to circumvent US laws.

With BetonSports under attack for running sports books in the US, other companies in the sector attempted to persuade investors that they did not face the same risk. Gaming VC, an online casino operator, gave a “geographic clarification”, reminding investors that it had “no online operations in the US and does not transact any wagering activity on behalf of players in the US”.

Playtech, a software provider, pointed out it was “not an online gaming operator” and its clients did not offer bets on sport. Interactive Gaming did not deny offering bets on sport, but said it had a “long standing policy of not taking wagers from the US”.

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