Peter Dicks, the former chairman of Sportingbet PLC, was arrested at Kennedy International Airport on Sept. 6 after customs officials discovered that he was wanted by Louisiana state police.
Offshore Internet gambling, however, is not a crime in New York, and Gov. George Pataki said the state law only permitted extradition if the accused person was physically present in the place where he is accused of breaking the law.
Dicks hasn't been in Louisiana in decades and the charges there revolved around his activities in the United Kingdom.
"The governor does support the effort to restrict illegal offshore gaming but he does not have the legal authority to extradite Mr. Dicks," said Pataki spokeswoman Jessica Scaperotti.
With no extradition warrant outstanding, Judge Gene Lopez declared Dicks a free man Friday after a brief hearing at a state court in Queens.
The tall, silver-haired businessman appeared elated as he rushed from the courthouse to a waiting car.
"I'm grateful," he said, adding that he would likely return home to England this weekend.
His attorney, Barry Slotnik, said Dicks will now turn his energies toward persuading authorities in Louisiana to drop charges there as well.
A spokesman for Louisiana state police did not immediately return a phone call about the case.
Dicks, 64, resigned as Sportingbet PLC's chairman after his arrest.
Asked after Friday's court session whether he might return to working for the bookmaker, he joked, "They've had enough of me."
He had been free on bail since Sept. 8 while waiting for New York authorities to evaluate the case.
The arrest of Dicks marked a rare foray by a state against a big-time online gambling operation, despite uncertainty about its legality.
Eight U.S. states have laws prohibiting Internet gambling: Washington, Nevada, Illinois, Indiana, Louisiana, South Dakota, Michigan and Oregon. Federal law also bans sports bets over the phone, even if the business is from overseas.
The Louisiana warrant issued in May charged Dicks with gambling by computer, a felony punishable by up to five years in prison and a $25,000 fine.
Pataki called for an overhaul of the state's extradition laws, which were crafted in the 1930s, saying through a spokeswoman that they needed updating to reflect "the modern high-tech world in which we live."
Millions of American players bet an estimated $6 billion per year online, according to industry figures.
U.S. bets account for about two-thirds of the $20.7 million profits at British-based Sportingbet, which reported revenues of more than $519 million from the Americas in the nine months ending last April 30.
The founder of Abingdon PLC, a private equity firm, Dicks also is a director at Nasdaq-listed Polar Technology Trust PLC and Standard Microsystems Corp. He had been non-executive director at Sportingbet since 2000.
Dicks was the second executive from a British gaming company to be detained in the United States in recent months. Former BetOnSports PLC Chief Executive Officer David Carruthers was arrested on federal charges in July at a Dallas airport.
Carruthers remains under house arrest in the St. Louis area awaiting trial on federal charges from the U.S. attorney's office in St. Louis based on the 1961 Wire Act.
Earlier this week, another large British-based gambling company, William Hill, announced that it has stopped accepting online poker and casino bets from U.S. customers.