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- a new York Times report U.S. Threatens Action Against Online Gambling
Federal prosecutors have begun a wide-ranging effort to curb the growing popularity of online gambling in the United States by quietly threatening legal action against American companies that do business with Internet casinos and sports betting operations based outside the country.
Apparently charges have not been filed yet. Still, the campaign, which has gone on for months, has already chalked up some significant non-legal victories. Several big media operations – including Infinity Broadcasting, Clear Channel Communications and the Discovery Networks - stopped running advertisements for offshore Internet casinos last fall in light of the threat of further scrutiny that might lead to prosecution.
The investigation of the Internet gambling industry, is being run by Raymond W. Gruender, the United States attorney in the Eastern District of Missouri.
It comes as millions of Americans have turned to their home computers to place sports bets and play casino games. Using credit cards or other electronic payment methods, players can place wagers with the Internet casinos, most of them in Costa Rica, the Caribbean or the Isle of Man, between Ireland and Britain.
The investigation into the activities of media, public relations and technology companies relies on a controversial legal concept that holds that the American businesses, by providing advertising and other services that support Internet gambling, are "aiding and abetting" online casinos. That gives prosecutors an indirect way to attack the overseas enterprises, whose operations are illegal here but fall outside their jurisdiction.
While it is illegal to run an Internet gambling operation in the United States, state laws vary as to whether the bettor is committing a crime. New York, for instance, prohibits operation or promotion of an unlicensed casino, but it does not make the act of placing a bet a crime.
In trying to crack down on Internet gambling through American companies that provide support services, particularly advertising and marketing, the government may find itself on shaky legal ground.
The reason is that broadcasters and marketers could well be within their First Amendment rights in advertising on behalf of Internet casinos.
But prosecutors may be able to develop a sound case on the ground that American companies are profiting from the success of Internet casinos, a plainly illegal enterprise in the United States.
The investigation underscores the complex legal and political issues raised by the borderless Internet. The overseas casino operations are legal and licensed in the jurisdictions where they are based, permitting them to reach through the Web to customers in the United States, where federal and state laws forbid the operation of unlicensed casinos.
The campaign by the federal government dates at least to last June, when John G. Malcolm, deputy assistant attorney general for the criminal division of the Justice Department, sent a letter to trade groups representing
publishers and broadcasters. The letter warned the trade groups that their members might be in violation of the law by aiding and abetting online casinos.
By sending an official notice, the government was giving companies "knowledge" that Internet gamblers were committing a crime, one of two main elements to the crime of aiding and abetting.
But aiding and abetting has a second element - whether the broadcaster is furthering the commission of a crime.
This might be hard for the government to prove; television and radio audiences are so broad that many, if not most, of the people watching or listening to an advertisement are not going to place a bet over the Internet. The broadcasters could be seen as merely disseminating information.
Even though the legal issues have not been resolved, the inquiry is already achieving some of its goals merely by raising questions.
Broadcasters are already under scrutiny from regulators and legislators who are seeking to establish new standards regarding obscenity.
Some media companies have already turned their backs on Internet gambling advertisements. The Travel Channel stopped running them this fall on the World Poker Tour, one of the channel's most popular programs
Similarly, Clear Channel, which operates 1,200 radio stations and 40 television stations, stopped running advertisements last fall after receiving a letter from prosecutors.
Other companies, however, have not changed their policies. Yahoo and Google continue to accept paid advertisements from online gambling operations.
The investigation has recently spread beyond advertising. The subpoena received by some providers asked them to provide information not just about advertisers working with overseas Internet casinos, but also about public relations firms, consultants, banks, and software and telecommunications companies.
In the earlier subpoenas to media companies, the government sought information dating to 1997 about each company's relationship with online casinos.
Given the pressures on online casinos, research analysts have recently downgraded expectations for the growth of the industry, which derives about half its revenue from Americans. |
