The US is taking measures to crack down on internet gambling

Officials said Peter Dicks, 64, had been detained under a warrant issued by state authorities in Louisiana in July accusing him of gambling by computer.

Mr Dicks is being held in New York, and faces a bail hearing on Friday.

His arrest follows the detention of Betonsports' chief David Carruthers, who was arrested on racketeering charges at Dallas airport in July.

The arrests are the latest in a string of US moves designed to discourage internet gambling.

Sportingbet's shares were suspended on the London stock exchange after news of Mr Dicks arrest.

A spokeswoman for the Louisiana state police said they would seek to bring Mr Dicks to the state to stand trial.

She said other arrest warrants had been issued in connection with the case but did not reveal whether other gaming firms had been targeted.

At a brief hearing in the Queens county court, his lawyer, Peter Neiman told the court: "He is really not a flight risk. This is not some mobster who has connections to the crime world."

But Mr Dicks was told the judge did not have the power to grant bail and so would reappear in court on Friday.

A separate hearing has been set at New York City Criminal Court on September 14 to decide whether Mr Dicks should be extradited to Louisiana.

Shares blow

The announcement dealt a blow to other gambling firms, with shares in Partypoker plunging nearly 10% and 888 Holdings sinking almost 16%.

Sportingbet declined to say why Mr Dicks had been arrested.

In the US, online gaming is a $12bn a year business that is expanding despite the government's opinion that it violates a law against placing interstate bets using telephone lines.

This has prompted Congress to propose a US law banning banks and credit card companies from processing internet gambling payments.

News of the arrest came hours after the firm announced it was in talks with smaller rival World Gaming about a potential �56.6m takeover.

The company, which also owns the Paradise Poker brand, has more than 2.5 million customers signed and an annual turnover of more than $1.2bn (�630m).