A Call to Action in the US Advertising Crisis

9 December 2003

The ongoing Internet gambling advertising crisis in the United States was a hot topic at the Interactive Gambling and Entertainment forum in the Bahamas, a legal and tax conference that concluded this morning.

"The rumor is worse than the reality, and that's what the government likes to do."
- Lawrence Walters
Weston, Garrou & Dewitt

The matter has been a top concern for the I-gaming industry since the publicizing in September of subpoenas issued by a U.S. attorney in the Eastern District of Missouri to Web sites that carry advertisements for online gambling services. In short, the Department of Justice has told U.S. media outlets that running I-gaming ads is against the law; media outlets have responded by ending relationships with I-gaming clients, creating a panic in an industry that was already under siege.

Lawrence Walters, an attorney for Weston, Garrou & Dewitt, has been at the forefront and was on hand in the Bahamas to offer his assessment. Walters has contested all along that the government has no grounds to deny media outlets the right to carry advertising for online gambling services and reemphasized Monday that its actions amount to a "censorship campaign."

First Amendment rights, he said, are being violated and he's calling on the industry to do something about it before it's too late. The industry needs to seek a declaratory judgment, he said, on the basis that subpoenas against media outlets are unconstitutional--a point that attorney Patrick O'Brien of Greenberg Traurig made Sunday, the opening day of the conference. Both said it will take only one test case, but finding the right party to step up won't easy. Walters said it needs to be a multilateral effort by operators, portals, media outlets and industry associations.

As for the urgency of the matter, Walters pointed out that the courts will not hear any motion for a declaratory judgment once charges are brought against any of the parties subpoenaed.

Walters also talked about the government's approach, which he called a chilling effect. "The government wants to evaluate the industry's thought process," he said.

No charges have been filed in what has been an information-gathering mission up to this point. Nevertheless, the government's actions have resulted in a domino effect in which a few broadcasters pulled their ads and the rest followed.

"The rumor is worse than the reality," Walters said, "and that's what the government likes to do."

The "reality," he said, is that aiding and abetting charges have never worked against advertisers. "We've looked long and hard for evidence, cases and precedence that mere advertising would give rise to criminal charges of aiding and abetting and found nothing," he said.

Speculation then turns to whether the government will bring charges against any of the parties subpoenaed. O'Brien pointed out that the government only takes "slam dunk" cases. This, coupled with Walter's points on aiding and abetting, might suggest that the government won't pursue the matter in the courts, but Walters maintains that the industry needs to be proactive.

"This is not a time for the wait-and-see attitude that's pervasive in the industry," he said.

Mark Balestra

Mark Balestra is the Managing Director at BolaVerde Media Group. He previously worked at Clarion Gaming and the River City Group where he was the publisher of iGamingNews. He lives in St. Louis, Missouri.