Internet poker is already illegal...
Boise
Party poker is almost toast...
The War Against Online Gambling
The US Department of Justice has consistently maintained that online
gambling is illegal. In a letter to US broadcast organisations dated 11
June 2003, John G.Malcolm, the Deputy Assistant Attorney General, Criminal
Division,of the United States Department of Justice wrote;
"Notwithstanding their frequent claims of legitimacy, Internet gambling
and offshore sportsbook operations that accept bets from customers in the
United States violate Sections 1084, 1952, and 1955 of 18 of the United
States Code, each of which is a Class E felony. Additionally, pursuant to
Title 18. United States Code. Section 2, any person Or entity who aids or
abets in the commission of any of the above-listed offenses is punishable
as a principal violator of those statutes. The Department of Justice is
responsible for enforcing these statutes and we reserve the right to
prosecute violators of the law."
Statutory Instruments and State Laws
Known colloquially as the "Wire Wager Act," Title 18, United States Code,
Section 1084(a) provides that:
"Whoever being engaged in the business of betting or wagering knowingly
uses a wire communication facility for the transmission in interstate or
foreign commerce of bets or wagers, or information assisting in the
placement of bets or wagers on any sporting event or contest, or for the
transmission of a wire communication which entitles the recipient to
receive money or credit as a result of bets or wagers, or for information
assisting in the placing of bets or wagers, shall be fined under this
title or imprisoned not more than two years or both."
The purpose of the statute is two-fold:
- To assist the various States and the District of Columbia in the
enforcement of their laws pertaining to gambling, bookmaking, and like
offenses.
- To aid in the suppression of organized gambling activities by
prohibiting the use of wire communication facilities which are or will be
used for the transmission of bets or wagers and gambling information in
interstate and foreign commerce.
The Prohibition of Illegal Gambling Businesses Act 1955 states that;
(a) Whoever conducts, finances, manages, supervises, directs, or owns all
or part of an illegal gambling business shall be fined under this title or
imprisoned not more than five years, or both.
(2) ''gambling'' includes but is not limited to pool-selling, bookmaking,
maintaining slot machines, roulette wheels or dice tables, and conducting
lotteries, policy, bolita or numbers games, or selling chances therein.
Section 1952 of Title 18, United States Code, which is also referred to as
the Travel Act, also proscribes interstate gambling activity by stating:
''... the use of any facility in interstate or foreign commerce, including
the mail, with intent to (1) distribute the records of any unlawful
activity ... or (3) otherwise promote, manage, establish carry on or
facilitate the promotion, management, establishment or carrying on, of any
unlawful activity ... shall be fined not more than $10,000 or imprisoned
for not more than five years or both.''
The Organized Crime Control Act of 1970 was signed into law by President
Richard Nixon. It prohibits the creation or management of a gambling
organization involving 5 or more people, if it has been in business more
than 30 days or accumulates $2000 in gross revenue in a single day. The
Racketeer Influenced and Corrupt Organizations Act (RICO) is a United
States federal law which provides for extended penalties for criminal acts
performed as part of an ongoing criminal organization. RICO was enacted by
section 901(a) of the Organized Crime Control Act of 1970, Pub. L. No.
91-452, 84 Stat. 922 (15 October 1970). RICO is codified as Chapter 96 of
Title 18 of the United States Code, 18 U.S.C. § 1961 through 18 U.S.C. §
1968.
On July 11 2006 the Internet Gambling Prohibition and Enforcement Act,
H.R. 4411 was approved by the House of Representatives today by 317 to 93
votes. To pass into law it will now need to be approved by the Senate and
the President. The bill will make it illegal to use credit cards and fund
transfers from banks to settle internet wagers and, it will update the
Wire Act to specifically prohibit online gambling, allowing the
authorities to work with Internet service providers to block access to
online gambling web sites.
In addition to the statutory instruments, eight US states have laws that
specifically prohibit Internet gambling: Washington, Nevada, Illinois,
Indiana, Louisiana, South Dakota, Michigan and Oregon.
Convictions brought in relation to operating Internet gambling websites
In June 1997 a Greene County grand jury indicted Michael F. Simone and
Interactive Gaming & Communications on charges of promoting gambling in
the first degree, alleging that the defendants committed a criminal
violation of Missouri law by accepting gambling wagers through the
Internet from a Missouri resident. Springfield, Missouri Attorney General
Jay Nixon stated at the time;
"These criminal convictions should serve as a clear notice to Internet
operators that we will aggressively pursue violations of Missouri law,"
Nixon said. "Cyberspace is no safe haven for lawbreakers........Internet
gambling presents a situation where any 15-year-old who gets hold of a
credit card can turn the family den into a casino....This is an activity
that clearly is illegal in the state of Missouri, and I am proud that we
have obtained these convictions."
Simone paid a $2,500 fine to the state of Missouri and IGC paying a $5,000
fine and agreeing to pay $20,000 to the state for the cost of the
prosecution. Simone had fought extradition to Missouri but he was ordered
to stand trial by a lower court in Pennsylvania.
The first federal charges for Internet gambling were filed on March 18
1998 in the United States District Court for the Southern District of New
York, charging Jay Cohen with conspiracy to violate the Wire Wager Act, 18
U.S.C. 1084(a), and seven substantive counts of violating, and aiding and
abetting violations of, the Wire Wager Act, in connection with his
operation of World Sports Exchange (WSEX).
WSEX, located on the island of Antigua in the Caribbean, targeted
customers in the United States through the placement of ads on the radio,
in newspapers, and on television. Customers were invited to bet on
American sporting events either by ringing a toll-free telephone number
or, by placing bets over the Internet. New customers were required to wire
$300 to their account in Antigua. In the course of an FBI investigation
into offshore bookmaking, FBI agents in New York contacted WSE by
telephone and internet numerous times between October 1997 and March 1998
to open accounts and place bets.
On February 28, 2000 Cohen was found guilty of violating all three clauses
of Section 1084(a) and sentenced to 21 months' imprisonment. Cohen's
conviction was affirmed and in June 2003, the United States Supreme Court
refused his petition for review. In October 2002, Cohen began serving his
sentence. WSEX is still happily trading.
At the time of Cohen's trial Manhattan U.S. Attorney Mary Jo White said
that the case showed that operators of illegal sportsbooks who took bets
from Americans could not avoid the federal wager law by simply moving
their business offshore;
``An Internet communication is no different than a telephone call for
purpose of liability under the Wire Wager Act,'' she said. ``As this case
demonstrates, persons convicted of operating Internet sportsbooks offshore
face very serious consequences -- imprisonment and thousands of dollars in
fines.''
In the State of New York v. World Interactive Gaming Corp July 1999, the
Court granted an injunction barring World Interactive Gaming Corporation,
Golden Chips Casino, Inc. and their principals, officers, and directors
from operating within or offering to residents of the State of New York
State gambling over the Internet. The court held that -
"The act of entering the bet and transmitting the information from New
York via the Internet is adequate to constitute gambling activity within
New York state," moreover, it stated that "the Wire Act, Travel Act and
Wagering Paraphernalia Act all apply despite the fact that the betting
instructions are transmitted from outside the United States over the
Internet."
In January 2000, federal prosecutors in St. Louis, Missouri charged Marc
Meghrouni and Scott Shaver, the owners of Paradise Casino, which operated
an offshore sports book in Curacao, with violating the Wire Wagering Act,
as well as tax fraud. Additionally, Paradise Casino was charged with money
laundering relating to the spending of betting funds in the United States.
Meghrouni, Shaver and Paradise pleaded guilty to all of the charges and
agreed to forfeit a one million dollar condominium, and a 1995
Lamborghini.
In October 2001 New Jersey Attorney General John J. Farmer, Jr. announced
that divisions of Gaming Enforcement and Consumer Affairs had filed civil
actions against 2betdsi.com, Intercasino.com, Laythepoints.com,
Sportingbet.com, Sportsbook.com,Intertops.com, BetonSports.com,
Betmill.com amongst others for acting in violation of New Jersey law by
accepting wagers from individuals, including minors, located in New
Jersey. The suit alleged that the defendants operated illegal sports book
sites where New Jersey residents, via the Internet or telephone, can place
wagers on professional and college sporting events.
On December 3 2001 Gold Medal Sports, an online sportsbook which operated
on the Island of Curacao in the Dutch Netherland Antilles, entered a
guilty plea to racketeering and a criminal forfeiture count. On February
26, 2002, Chief U.S. District Judge Barbara B. Crabb sentenced Gold Medal
Sports for racketeering, and imposed a forfeiture of $3,528,617.47. Judge
Crabb also sentenced Pede and D'Ambrosia for filing false U.S. Individual
Income Tax Returns, and operating an offshore sports book, in violation of
the federal Wire Wagering Act. Pede and D'Ambrosia each received a prison
term of five years. They also paid fines of $100,000 each, and paid back
taxes totaling $1,429,565.
In January 2002 Francis Howard, a Certified Public Accountant in Las
Vegas, and Randy Moreau, an accountant in Miami, each pleaded guilty to
owning a share of a sports betting business (Gold Medal Sports) that
engaged in illegal sports wagers, using the phone lines and Internet. In
April 2002 Attorney Bruce Meagher pleaded guilty to participating in the
gambling conspiracy involving Gold Medal. He received one month in jail,
five months of home detention, and a fine of $20,000. Gold Medal manager
Rick McColley was indicted on February 21, 2002. He is currently a
fugitive. Howard and Meagher were both convicted of violating the Wire
Wagering Act.
On October 21, 2002 David Tedder was arrested by FBI and IRS Special
Agents at O'Hare International Airport in Chicago, Illinois. He had been a
fugitive from justice since being charged by the Grand Jury in September
of that year with Money Laundering and Conspiracy. Information had been
received to the effect that Tedder would be arriving in Chicago on Delta
Airlines flight #1608, which was non-stop service from Atlanta. He was met
at the gate by FBI and IRS agents and taken into custody. Tedder was
indicted with conspiracy to violate the Wire Wagering Act, and conspiracy
to commit money laundering (including helping D'Ambrosia move $3.5 million
in Gold Medal profits from a Merrill Lynch account in the United States to
Tedder's MIB offshore bank after the NFL sued D'Ambrosia in early 2000
over a false advertisement in the USA Today newspaper).
Following a jury trial, petitioner was convicted of conspiring to violate
the wire wagering act, 18 U.S.C. 1084, in violation of 18 U.S.C. 371;
conspiring to launder money, in violation of 18 U.S.C. 1956(h); and two
counts of money laundering, in violation of 18 U.S.C. 1957. The jury also
rendered a criminal forfeiture verdict under 18 U.S.C. 982 (2000 & Supp.
II 2002).
In August 2003 Tedder was sentenced by United States District Chief Judge
Barbara B. Crabb to five years in prison, followed by a three-year term of
supervised release and $400 in special assessments. The Judge also ordered
Tedder to pay a fine of $1,060,040, due and payable immediately with
interest accruing and to immediately forfeit $2,765,052 in laundered
proceeds. The charges brought against Tedder were the result of an
investigation conducted by the Internal Revenue Service-Criminal
Investigation, the Federal Bureau of Investigation, the U.S. Postal
Inspection Service, and the State of Wisconsin, Department of Justice,
Gambling Enforcement Bureau. In September 2005, the United States Supreme
Court refused Tedder's petition for review .
In total, the U.S. Attorney's Office for the Western District of Wisconsin
collected $9,318,149.67 from their investigation into Gold Medal Sports.
This amount consisted of fines of $1,594,915.20; forfeitures of
$6,293,669.47; and back income taxes of $1,429,565.
In March 2003 Ronald "The Cigar" Sacco, the founder of Betcris, was
sentenced to 21 months in federal prison for illegal gambling and money
laundering. Sacco had been originally indicted in April 4, 2000, with five
other men on charges of running an illegal sports gambling ring that used
a toll-free number in the United States to place bets in Costa Rica. In
1993, he was arrested in the Dominican Republic and charged with operating
an illegal betting ring that allegedly netted $1 billion a year. He spent
five years in prison after pleading guilty. Sacco had also previously been
a Bay Area bookie and had a number of felony convictions for bookmaking.
A federal racketeering indictment unsealed on April 11 2005 charged Arthur
Gianelli with running an illegal gambling ring that allegedly paid
protection money to the New England mob. The charges contained in the
indictment included racketeering, extortion, and money laundering and
stemmed from enterprises that Gianelli and his associates allegedly ran
from 1999 to the time of the indcitment, including an "illegal" Internet
gambling operation aided by an offshore sportsbetting website.
The indictment alleged that Gianelli's group made money illegally from
football betting cards, video poker machines, and Internet gambling. The
ring allegedly paid an offshore gambling company called Weshtod
Consultants, with offices in San Jose, Costa Rica, to take bets from
Massachusetts customers, both on the Internet, at www.dukesportsweb.com,
and over the telephone. Todd Westerman, 41, of San Jose, the alleged owner
of Weshtod Consultants, who was arrested by customs at Miami airport, was
charged in the indictment, along with his company, of running an offshore
gambling office and with taking bets from US customers in Massachusetts.
In May 2005 a 39-count Enterprise Corruption indictment was filed in
Queens County Supreme Court charging that another gambling ring, that made
protection payments to reputed Bonanno captain Anthony "Tony Green" Urso,
operated three wire rooms that handled illicit wagers averaging $250 each
at 136-72 72nd Avenue in Kew Gardens Hills; 147-19 Jewel Avenue in
Flushing and at a shopping mall in San Jose, Costa Rica.
The criminal enterprise was alleged to have handled about 2,000 bets a
day, that generated gross revenues of nearly $500,000, $15 million a month
and $180 million a year during the 28-month period covered by the
indictment. It was alleged that the gambling ring relied on modern
technology, including computers, the Internet, e-mail and AOL instant
messaging to safedepositsports.com and a toll free telephone number -
1-800-582-1383 - that ran up a monthly bill of over $50,000.
The indictment charged that Christopher Bruno, 34, of 4022 Jean Avenue in
Bethpage, New York was the ringleader and major bookmaker in the
enterprise and that his partners were Joseph Amato, 40, of 439 North
Queens Avenue in Massapequa, New York, who was also allegedly the ring's
enforcer who ensured that its protocols and procedures were obeyed, and
Dana Antal, 36, of 606 Martz Road in Stroudsburg, Pennsylvania.
In August 2005 Christopher Bruno, 34, pleaded guilty and was scheduled to
be sentenced to three to nine years in prison. Appearing before Queens
Supreme Court Justice Richard L. Buchter, Bruno pleaded guilty to
Enterprise Corruption and was ordered to immediately forfeit $510,000 in
cash, investment accounts and vehicles. Among the forfeited items were a
2003 Mercedes Benz valued at $95,000, a 2002 GMC Denali valued at $29,000
and a rare baseball card collection reportedly worth as much as $300,000.
In 2003 Betcorp changed its name from Consolidated Gaming Corporation
("CGC") as part of a restructuring programme that included the acquisition
of BetWWTS, a north American facing sportsbooks operator. In early 2005,
the Company also acquired Sinsational Intertainment Inc an online sports
betting and casino operator based in Antigua.
On April 7, 2005 the Department of Justice filed a 12-count indictment
against William Scott and Jessica Davis of World Wide Tele Sports alleging
that wagers placed by toll-free telephone numbers and through
www.BetWWTS.com and other Internet websites violated the Wire and Travel
Acts. The indictment was unsealed by the District Court for the District
of Columbia on May 16 2006. It was alleged that by causing the funds to be
sent from places within the United States to places abroad with the intent
to promote Wire and Travel Act violations, Scott and Davis engaged in a
money laundering conspiracy. They pair were also charged with failing to
disclose foreign bank accounts, which it was believed they had opened in
Antigua, St. Kitts, St. Maarten, Singapore, Canada, Australia, and the
Channel Islands. BetWWTS is still trading. Davis has reportedly left the
company but Scott, according to some Australian newspapers, still hold
shares in Betcorp through a family trust, although his name does not
appear on any of the trusts.
Scott was allegedly charged by US authorities in 1998 with running an
online book, but fled to Antigua where he formed BetWWS, which was later
acquired by Betcorp for $58.6 million. Revelations in the Sydney Morning
Herald also stated that he was once jailed for 'racketeering' in the
eighties.
On Monday July 17 a federal grand jury in the Eastern District of Missouri
returned a 22-count indictment charging 11 individuals and four
corporations on various charges of racketeering, conspiracy and fraud. The
indictment was returned on June 1, 2006.
The founder of Costa Rican based BetonSports.com, Gary Stephen Kaplan, 47,
was charged with 20 felony violations of federal laws including: the Wire
Act, Racketeer Influenced and Corrupt Organizations (RICO) Conspiracy,
interstate transportation of gambling paraphernalia, interference with the
administration of Internal Revenue laws and tax evasion.
Kaplan, like Scott, formerly of BetWWTS, had operated a sportsbook in New
York City in the early 1990s, but after gambling charges were brought
against him in May 1993, he had moved his betting operation to Florida and
eventually offshore to Costa Rica.
According to the indictment, BetonSports.com, the most visible outgrowth
of Kaplan's sports bookmaking enterprise, misleadingly advertised itself
as the "World's Largest Legal and Licensed Sportsbook." It also alleged
that Kaplan failed to pay federal wagering excise taxes on more than $3.3
billion in wagers taken from the United States and sought forfeiture of
$4.5 billion from Kaplan and his co-defendants, as well as various
properties.
The indictment alleges that Gary Kaplan and Norman Steinberg, as the
owners and operators of Millennium Sportsbook, Gibraltar Sportsbook, and
North American Sports Association, took or caused their employees to take
bets from undercover federal agents in St. Louis who used undercover
identities to open wagering accounts.
The indictment also alleges that Kaplan and Mobile Promotions illegally
transported equipment used to place bets and transmit wagering information
across state lines and that DME Global Marketing and Fulfillment shipped
equipment to Costa Rica from Florida for BetonSports.com.
The racketeering conspiracy alleges that the defendants agreed to conduct
an enterprise through a pattern of racketeering acts, including repeated
mail fraud, wire fraud, operation of an illegal gambling business and
money laundering. Other defendants in the racketeering conspiracy included
Kaplan's siblings, Neil Scott Kaplan and Lori Kaplan Multz; Norman
Steinberg; David Carruthers, chief executive officer of BetonSports.com;
Peter Wilson, media director for BetonSports.com
On 16 August 2006, it was announced that there had been an expansion of
the criminal complaint against persons connected with the offshore
sportsbook Bettheduck. Richard Anderson of Los Angeles, Darwin Mobley, of
San José, Costa Rica, Jorge Esteban Hall Zumbado, of San José, Costa Rica
and Houshang Pourmohamad of Richmond, CA were indicted for their roles in
"an illegal gambling and money laundering scheme".
The indictment charges the quartet with;
Conspiracy to conduct an illegal gambling business in violation of 18
U.S.C. § 371. This count carries a maximum statutory penalty of five years
imprisonment, a $250,000 fine, three years supervised release, and a $100
special assessment.
Conducting an illegal gambling business in violation of 18 U.S.C. §§ 1955,
2. This count carries a maximum statutory penalty of five years
imprisonment, a $250,000 fine, three years supervised release, and a $100
special assessment.
Conspiracy to launder funds derived from illegal gambling business in
violation of 18 U.S.C. § 1956(h). This count carries a maximum statutory
penalty of twenty years imprisonment, a $500,000 fine, five years
supervised release, and a $100 special assessment.
Conspiracy to use facility in interstate and foreign commerce to carry on
unlawful gambling business in violation of 18 U.S.C. § 371. This count
carries a maximum statutory penalty of 5 years imprisonment, a $250,000
fine, 3 years supervised release, and a $100 special assessment.
Additionally, the indictment charges Mr. Mobley and Mr. Zumbado, the
alleged operators of the sportsbook in Costa Rica, in absentia, with the
following:
Use of facility in interstate and foreign commerce to carry on and
facilitate the carrying on of unlawful gambling business in violation of
18 U.S.C. § 1952. Each count carries a maximum statutory penalty of 5
years imprisonment, a $250,000 fine, 3 years supervised release, and a
$100 special assessment. However, any sentence following conviction would
be imposed by the court after consideration of the U.S. Sentencing
Guidelines and the federal statute governing the imposition of a sentence,
18 U.S.C. § 3553.
On Thursday, 6 September 2006 the Non-Executive Chairman of the online
betting company Sportingbet Peter Dicks, was detained at JFK Airport by
the Police Department of the Port Authority of New York and New Jersey in
repsonse to an arrest warrant issued by the state of Louisiana relating to
gambling by computer (LA R.S. 14:90.3(E);
"Gambling has long been recognized as a crime in the state of Louisiana
and despite the enactment of many legalized gaming activities remains a
crime. Gambling which occurs via the Internet embodies the very activity
that the legislature seeks to prevent. Gambling by computer is the
intentional conducting, or directly assisting in the conducting as a
business of any game, contest, lottery, or contrivance whereby a person
risks the loss of anything of value in order to realize a profit when
accessing the Internet, World Wide Web, or any part thereof by way of any
computer, computer system, computer network, computer software, or any
server."
On Sept. 8 Dicks was was released on bond by the New York Supreme Court of
Justice. His lawyer Peter Neiman told the judge that his client's
willingness to travel to the U.S. so soon after the arrest of David
Carruthers clearly demonstrated that he did not believe that he had done
anything wrong. Requesting bail for his client, who is now fighting
extradition to the US Neiman said; "There are serious questions regarding
whether New York's extradition statute permits extradition for conduct
allegedly committed entirely overseas.''
The fear for Dicks, Sportingbet and all other online gambling operators
that accept bets from US citizens, is that the floodagtes will now open
and the seven other US states that have stringent anti gambling laws, will
now be encouraged to take action against the online gambling industry.
Charging of Internet sportsbook agents
Associates of Gambino family member Frank "The Bear" Basto, Joseph P.
Fafone and Joseph J. Fafone were charged with acting as agents on behalf
of a sports betting operation based in Costa Rica called
Bestlinesports.com. Both faced state bookmaking charges for collecting
bets and making cash payoffs locally on wagers placed in Costa Rica via
toll-free telephone and internet website links. Bestlinesports was
recently listed in the indictment in the case of United States District
Court of Eastern District of Missouri vs. BetonSports.com, as a website
owned by Betonsports; although those behind the website claim that this is
not the case.
In 2004 Scott Andrew Carstens and Keith M. English were charged with
racketeering; accused of acting as bookmakers, collecting and paying out
sports gambling bets chanelled through the Costa Rican based online
betting website Safedepositsports.com.
In late July 2006 eight men were arrested and booked on charges that they
were operating as agents on behalf of another Costa Rican based online
betting website, BetTheDuck.com. U.S. District Attorney Kevin Ryan was
reported as saying that the men collected wagers in the form of cash and
checks from bettors in the United States on behalf of the website. They
would then hand over the funds to "runners" who transmitted or transferred
the money to the offshore firm.
The complaint against the eight charges them with conspiracy to conduct,
finance, manage, and supervise an illegal gambling business in violation
of 18 U.S.C. § 371 and conducting, financing, managing, and supervising an
illegal gambling business in violation of 18 U.S.C. § 1955. Each count
carries a maximum statutory penalty of five years imprisonment, a $250,000
fine, three years supervised release, and a $100 special assessment. The
complaint also charges the defendants with conspiracy to launder money in
violation of 18 U.S.C § 1956. Each count carries a maximum statutory
penalty of twenty years imprisonment, a $500,000 fine, five years
supervised release, and a $100 special assessment.
Actions taken against the advertising of Internet gambling services
The Justice Department claims that selling advertising to online casinos
may be "aiding and abetting" an illegal activity and they have employed
money seizures and subpoenas to outlaw the activity, in their most high
profile case, seizing $3.2 million from the Discovery Network, that had
been paid by PartyPoker.com and ParadisePoker.com for advertising slots.
PartyPoker said in its IPO prospectus;
"In April 2004, the Group was informed by Discovery Communications, the
television and media company that owns the Travel Channel, that US
marshals had seized over $2 million of the Group's funds from Discovery
Communications. The amount involved was originally paid to Discovery
Communications for television advertisements to promote PartyPoker.com.
Court documents state that Discovery Communications was told that it could
be party to illegal activity (effectively 'aiding and abetting' a crime)
by broadcasting such advertisements. In October 2003, Discovery
Communications told the Group that it would cease broadcasting commercials
which had been pre-paid."
In his letter to broadcast organisations dated 11 June 2003, John
G.Malcolm, Deputy Assistant Attorney General, Criminal Division,United
States Department of Justice wrote;
With very few exceptions limited to licensed sportsbook operations in
Nevada, state and federal laws prohibit the operation of sportsbooks and
Internet gambling within the United States, whether or not such operations
are based offshore. Broadcasters and other media outlets should know of
the illegality of offshore sportsbook and Internet gambling operations
since, presumably, they would not run advertisements for illegal narcotics
prostitution, child pornography or other prohibited activities. We'd
appreciate it if you would forward public service message to all of your
member organizations which may be running such advertisements, so that
they may consult with their counsel or take whatever actions they deem
appropriate.
In April 2004 the major search engines and portals, most notably google
and yahoo, announced that they would fortwith discontinue accepting
advertising for online gambling sites.
Catherine L. Hanaway, the United States attorney for the Eastern District
of Missouri, has been reported as saying that prosecutors would consider
those that accepted gambling ads to be the eqivalent of those that
accepted advertising on behalf of drug dealers and child pornographers.
Hanaway's office sued Vulcan Sports Media Inc., which owns The Sporting
News, alleging that from the spring of 2000 to December 2003, the latter
had accepted paid print, Internet and radio advertising for Internet and
telephonic gambling services, and that its advertising reached U.S.
audiences. In January 2006 the Sporting News agreed to a $7.2 million
settlement with the U.S. government to resolve the matter. In 2004 in St.
Louis sports radio stations KFNS-AM, KFNS-FM and KFRT-AM paid $158,000 to
settle allegations that they too had promoted illegal online gambling.
Action taken against online gambling portals
In a lesser known case, but one that goes to the very heart of the online
advertising debate, Nicholas Drakos, who hosted a Web site known as
www.internationalnetcasino.com that provided bettors with instructions on
how to set up accounts with offshore sportsbooks, was arrested in April
2004 after assisting undercover detectives in placing bets on his Web site
and charged with promoting gambling, conspiracy and money laundering
between January and April of 2004. Drakos was subsequently convicted and
sentenced to 90 days on a manual labour program and three years' probation
for illegally promoting gambling. County Assistant Prosecutor Melanie
Smith said that under state law, a person is guilty of promoting gambling
when he or she knowingly engages in conduct that "...materially aids any
form of gambling activity." A clear warning one might think to the many
Stateside online gambling affiliate websites. But in truth none of them
seem to have cut back on their activities in the wake of the judgement.
Actions against software and payment processing companies
In July 2005 PayPal announced that it would pay the U.S. government $10
million in repsonse to claims from the U.S. Attorney for the Eastern
District of Missouri that its provision of services to online gambling
merchants violated 18 U.S.C. 1960 of the USA PATRIOT Act, which prohibits
the transmission of funds that are known to have been derived from a
criminal offense or are intended to be used to promote or support unlawful
activity. Raymond Gruender, then U.S. Attorney for the Eastern District of
Missouri, said in a statement following the case;
"offshore sportsbooks and online casino gambling operations which do
business in the United States generally do so in violation of federal
criminal laws. Therefore, we will continue to investigate and pursue such
activity."
In October 2001 CryptoLogic Inc, the software developer, was sued by the
New Jersey Attorney General for assisting an online casino to take bets
from New Jersey citizens;
"If CryptoLogic knows these services are being used to violate New Jersey
laws, they're liable,'' said John P. Suarez, the assistant attorney
general who is director of the agency's Division of Gaming Enforcement.
"In our view, there's no question they know.''
In May 2002 WagerLogic and CryptoLogic agreed that any licensing or
related agreements they may enter into in the future will contain a
provision prohibiting the licensee or other entity or individual with
which WagerLogic or CryptoLogic contracts, from accepting sports bets from
persons located within New Jersey, unless and until it becomes legal to do
so.
Is the party over for PartyGaming?
In the wake of the arrests of various persons associated with Betonsports,
Mitch Garber PartyGaming's chief executive was quoted as saying that his
company would in the future be "legally marketing in the US ...through a
variety of channels - internet, television, radio, newspapers and
sponsorship."
In the wake of the arrest of Sportingbet chairman Peter Dicks, Mitch
Garber was further quoted as saying; "We are a FTSE 100-compliant company.
If the Department of Justice has any issue with our business, I would hope
they would notify us and communicate that with us fully."
PartyPoker said in its IPO prospectus;
"In April 2004, the Group was informed by Discovery Communications, the
television and media company that owns the Travel Channel, that US
marshals had seized over $2 million of the Group's funds from Discovery
Communications. The amount involved was originally paid to Discovery
Communications for television advertisements to promote PartyPoker.com.
Court documents state that Discovery Communications was told that it could
be party to illegal activity (effectively 'aiding and abetting' a crime)
by broadcasting such advertisements. In October 2003, Discovery
Communications told the Group that it would cease broadcasting commercials
which had been pre-paid."
PartyGaming also stated in its IPO Prospectus that it had received an
e-mail in January 2005 purporting to be from the office of the Louisiana
Attorney-General, requesting that the company desist from offering its
services in the US state. The company said that it had "no knowledge of
the legitimacy of the e-mail or its author" and that it would dispute
jurisdiction if a legal challenge were to be launched against it.
Kris Wartelle a spokesperson for the office of Louisiana's Attorney
General told the Financial times that it was possible that the email was
indeed legitimate;
"It is possible that our consumer protection division could have sent a
cease and desist letter following a request from the police gaming
enforcement division."
PartyGaming alleges that the Wire Act does not apply to online casinos and
online poker companies. Its case is built around the fact that in February
2001 United States District Court Judge Stanwood Duval, whilst looking to
the actual language of the Wire Act, ruled that it "does not prohibit
Internet gambling 'on a game of chance'." Duval's ruling was upheld
November 21, 2002 by the US Fifth Circuit Federal Appeals Court.
The problem with PartyGaming's reasoning is that until the U.S. Supreme
Court rules on the matter of the Wire Act (if, indeed, it ever does),
individual U. S. Attorney Generals are free to interpret the statute in
relation to online gambling as they see fit. That is to say, the decision
of the Fifth Circuit on the issue of the Wire Act and sports betting is
not binding on any other court outside the geographical boundaries of the
Fifth Circuit.
Some support for PartyGaming's argument is perhaps provided by the fact
that in the past U.S. Attorney Generals have typically chosen to only
target internet sports books that had explicitly taken bets by telephone.
Moreover, there is also some truth to the fact that in the past it was
always only American citizens that were charged in relation to the
operation of such books.
The problem with this line of reasoning, however, is that the arrest of
the two Brits, Carruthers and Dicks, and two Costa Rican citizens in the
case of betheduck.com, would seem to suggest that the rules of engagement
have changed. Moreover, in the case of Dicks, we have, for the first time,
seen the application of state laws that prohibit gambling, against a
non-US citizen. And, as any lawyer worth their salt will tell you,
violations of state laws can serve as a predicate offence for liability
under federal laws.
A sense of foreboding prevails
The words of US Attorney Catherine Hanaway of the Eastern District of
Missouri in the wake of the arrest of David Carruthers, have begun to take
on a certain sense of foreboding;
"Illegal commercial gambling across state and international borders is a
crime....This indictment is but one step in a series of actions designed
to punish and seize the profits of individuals who disregard federal and
state laws.....Just because you stand outside the U.S. doesn't mean you
can flow crime into the U.S"
Whilst the party may not yet be over for PartyGaming, it would certainly
be remiss of that company, and others like it, to believe that they are
somehow immune from prosecution. Moreover, in the particular case of
PartyGaming, it is fair to say that having invited the Department of
Justice to contact it as regards any illegal activities that it may be
engaging in, the company would do well to take seriously the next email
that arrives from the office of an attorney general asking it to desist
its activities.
ON 15 September The London Times reported that Louisiana had a total of
more than 50 warrants outstanding against executives from internet
gambling companies that have clients who live within the state's
boundaries;
"It is believed that those targeted by the warrants include other
Sportingbet directors, including Nigel Payne, the chief executive, and
board members of companies including PartyGaming and 888 Holdings."
In the wake of Peter Dicks' arrest a spokesperson for the Department of
Justice reiterated their position that online gambling; "contravenes three
statutes, the Wire Act, the Travel Act and the Illegal Gambling Businesses
Act."
On September 21, Sportingbet's new chief executive told the Financial
Times that the company would continue to aggressively target the US
market.
"It's the US or what's the point.....if you take the US away they (other
online gambling companies) will be a shadow of their former selves."
"I ain't about to ruin a $50 drunk on a ten dollar meal."
Dee.
http://www.workingforchange.com/comic.cfm?itemid=20771
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johnda...@cox.net
Michael K
gambling.
David Nicoson
> poker isnt gambling
I think that's like saying basketball isn't running. Gambling is a
part of poker.
That probably has very little to do with the legal issues, because they
end up redefining terms like this explicitly either in the law itself
or in the court system.
trang...@hotmail.com
I wish they still taught American government in schools. Maybe, just
maybe, people would understand the three separate branches of
government, and how they operate.
Omaha8_Beach
the 5th Circuit decision isn't binding in the other states it does not
have jurisdiction, it is the highest court to look at the "Does online
poker violate the Wire Act" question, and they said it does not.
And with all the publicity recently on online gaming, I think that if
there is any legitimate challenge to any State (or the DOJ) that tries
to prosecute someone for playing online poker, by solely using the Wire
Act, the US Supreme Court will look at it if it's appealed that far.
Of course, none of this matters if Congress passes a bill specifically
banning online poker, but it doesn't seem like that's going to happen
any time soon.
Ken
Follow
On Sep 27 2006 8:50 AM, trang...@hotmail.com wrote:
> Boise wrote:
> > There sure is a case history...If you get to the bottom, you can see that
> > Party poker is almost toast...
> >
> >
> > The War Against Online Gambling
> >
> >
> >
-snip way too damn much text-
> >
> > "It's the US or what's the point.....if you take the US away they (other
> > online gambling companies) will be a shadow of their former selves."
> >
> >
> >
> > "I ain't about to ruin a $50 drunk on a ten dollar meal."
> >
> > Dee.
> >
> > http://www.workingforchange.com/comic.cfm?itemid=3D20771
> I wish they still taught American government in schools. Maybe, just
> maybe, people would understand the three separate branches of
> government, and how they operate.
I agree that our citizens are ridiculously ill educated on the purposes of
government. A few points should be made though...
1. Poker is no more "gambling" than a carnival game. It's no more gambling
than a crane game at Denny's, but for some reason, these games are legal and
poker isn't. Sure, there are elements of chance in small samples, but those
elements can be turned to a person's favor in the long course of a career. For
some reason our idiot lawmakers don't see that at all or just don't care. Golf
falls under the definition of "gambling" in my state as well, though it isn't
enforced that way.
2. I can't imagine a company like Party Poker sitting around idly while our
lawmakers decide to ban them. American government works on money, just money
and nothing else lubes this nation up (usually for the inevitable barbed cock
the rest of us are stuck with), and these companies are capable of pulling $1M
tax free in daily right now. The problem Congress has isn't that they think
online gambling is immoral, they don't care in the least. They're just a mafia
boss who is pissed off that someone is holding out on the action and failing to
give them a piece. Once these companies realize that the only way they're going
to keep in business is to play ball with the greasy mafioso we call the feds,
then all the problems will be water under the bridge.
Anyway, my 2 bits are spent...
Follow :)
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