Sportingbet, the internet bookmaker, admitted yesterday for the first time that the US Department of Justice (DoJ) had raised the issue of prison sentences during negotiations over a settlement.

Legal sources have suggested in recent weeks that the DoJ will agree to a settlement with operators only if some of their directors and founding shareholders sign plea-bargain agreements involving short custodial sentences. There have also been suggestions that the DoJ is pushing for the repatriation of all profits made by foreign operators in the United States until their withdrawal 18 months ago after the formal ban in America on internet gambling.

Andy McIver, Sportingbet’s chief executive, said: “They did mention it at the outset. It hasn’t come up again, but that doesn’t mean it won’t come up again.” He said that the issue of repatriation of all US profits had not been raised by the DoJ, adding: “No specific sum has been discussed.”

He said that, despite the department’s hardline stance, he felt a compromise was possible. “In their view, US law has been broken and an equitable outcome is required — but I think they realise it takes two to tango.” Mr McIver said that he had no idea how long the negotiations would last, describing them as a long and winding road.

Rival operators appear to be at different stages of negotiations with the department. In April, Gigi Levy, the 888 chief executive, said that he believed a settlement of “$40 million to $100 million” was likely, while at a gaming conference in London yesterday John O’Malia, PartyGaming’s managing director, said he was confident of agreeing a deal this year.

Mr McIver was speaking after reporting a 143 per cent rise in third-quarter operating profits to £7.3 million from total wagers up 25 per cent to £364.6 million.Meanwhile, the French Government is expected to announce a relaxation of the state monopoly on internet betting on sports today. The move, designed to avert a reference to the European Court of Justice, could open up the market to British operators such as Ladbrokes and William Hill, although it is believed that horse racing may be excluded from the changes.

— Alan Garwood, BAE’s business development director, has become the third executive of the company to be served papers by US authorities investigating allegations of corruption, it was reported late last night. The DoJ is understood to have issued the subpoena two weeks ago when Mr Garwood was changing planes at Miami airport. It was days after BAE’s chief executive, Mike Turner, and its non executive Sir Nigel Rudd were issued with subpoenas in relation to the DoJ’s investigation of the 1985 al-Yamamah arms deal between Saudi Arabia and the UK.

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