The chief executive of Victor Chandler International (VCI), the online bookmaker, has been detained by the Israeli authorities in the latest crackdown on the internet gambling industry.

Michael Carlton is understood to have spent two hours helping the authorities with their inquiries before being released and allowed to return via London to the company’s headquarters in Gibraltar.

A spokesman for VCI refused to comment but confirmed that Mr Carlton was flying back from Israel and expected to be in the office this morning. At that point, the company would make a formal statement, he said.

Industry sources said that Mr Carlton had been detained in Tel Aviv over an advertising campaign run by Victor Chandler on the side of Israeli buses.

Internet gambling and the advertising of the pastime are deemed illegal in the country, although this is believed to the first time that anyone has been detained by the authorities.

The ban on internet gambling has not prevented Israelis from being among the leading lights in the industry. Empire Online and PokersStars are among a number of companies to be founded by Israeli nationals, who have made multimillion-pound fortunes.

Last year the US banned all financial transactions linked to internet gambling after the arrest by US authorities of the chief executive of BetOnSports and the chairman of Sportingbet. In September the joint chief executives of Bwin.com, the Austrian operator were arrested in France.

Separately, shares of PartyGaming fell by 1½p to 32½p yesterday after it emerged that one of its four founders had sold 160 million shares at 30½p, pocketing £48.8 million.

The shares are understood to have been part of the 6.96 per cent stake held by Vikrant Bhargava, the former group marketing director, who quit the company last year to back the start-up of Sirius, a Gibraltar-based hedge fund.

The sale of the 4.1 per cent stake leaves Mr Bhargava with 2.86 per cent. In June last year he sold shares worth £77.3 million and at flotation he pocketed £119.5 million from selling stock.

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