By Marty Graham

SAN DIEGO (Reuters) - World-renowned professional poker player Archie Karas, has been arrested on charges of cheating and defrauding a casino after authorities say he was caught marking cards at a California blackjack table.

Karas, 62, best known for reputedly building a beginning stake of $50 into a $40 million fortune during a record three-year winning streak, was taken into custody on Tuesday at his Las Vegas home, the San Diego County District Attorney's Office said on Friday.

He will be extradited to San Diego to face a criminal complaint filed last week charging him with burglary, winning by fraudulent means and cheating, the prosecutor's office said.

If convicted, Karas, whose real name is Anargyros Karabourniotis, faces a maximum penalty of three years in prison.

"This defendant's luck ran out thanks to extraordinary cooperation between several different law enforcement agencies who worked together to investigate and prosecute this case," said county District Attorney Bonnie Dumanis.

According to prosecutors, Karas was spotted by surveillance cameras marking cards - using tiny smudges of dye secretly wiped onto the backs of jacks, queens, kings and aces - while playing blackjack in July at the Indian-owned Barona Resort and Casino in Lakeside, California.

The marks gave Karas an unfair advantage by helping him identify the value of cards before they were dealt as he chose whether to take another card, or hold, in an effort to reach the winning value of 21 without going over, prosecutors said.

The scheme worked so well that he managed to cheat the casino out of more than $8,000 before he was caught, district attorney's office spokesman Steve Walker said.

'THREAT TO THE GAMING INDUSTRY'

California Justice Department spokeswoman Michelle Gregory said Karas was doing the marking with dye inserted into a hollowed-out gambling chip that he would inconspicuously swipe over the cards while playing through a deck.

A search warrant executed on Karas's home turned up hollowed-out chips from other casinos, but so far no other gambling establishments have lodged complaints against him, Gregory said.

But authorities said Karas has been accused of cheating before.

"The Nevada Gaming Control Board has investigated Karas on multiple occasions resulting in four arrests," said Karl Bennison, that agency's enforcement chief, said in a statement. "Karas has been a threat to the gaming industry in many jurisdictions."

Karas set the record for the largest and longest documented winning streak in gambling history from 1992 to 1995, arriving in Las Vegas with $50 in his pocket and going on to amass $40 million from high-stakes poker.

He subsequently lost most of those winnings at baccarat and dice games in three weeks, according to Tom Sexton, who publishes the online gambling magazine Poker News. Karas returned to the poker table many times, often with backers, and cleaned out many of the best players in the world, according to Sexton.

He is considered by many to have been the greatest gambler of all time and often has been compared with Nick "the Greek" Dandolos, another high-stakes gambler and high roller who died in 1966.

San Diego County has 19 federally recognized Indian tribes and 10 Indian casinos, more than any other county in the United States. Industry experts estimate that casinos nationwide lose tens of millions of dollars a year in various cheating scams.

(Reporting by Marty Graham; Editing by Steve Gorman, Bernard Orr)

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