Affiliate Indictment Stands in US Court

A New Jersey judge last week denied an attempt by New Jersey-based online gambling affiliate Nicholas Drakos to have an indictment against him dismissed.

Drakos, 48, was arrested in April 2004 after assisting undercover detectives in placing bets on his Web site, internationalnetcasino.com. He was indicted in November 2004 and charged with promoting gambling, conspiracy and money laundering between January and April of 2004.

The state's constitution contains no statute or amendment explicitly making Internet gambling illegal, and that's exactly what Drakos' attorney, Robert Dunn, argued in the request for dismissal.

Dunn also argued that Drakos did not know that running a gambling Web site was illegal and that along with his donations to the State Police and a local police union, his client, in fact, sent business cards that clearly advertised his online gambling business.

Assistant Prosecutor Melanie Smith argued, however, that under current state law, "A person is guilty of promoting gambling when he or she knowingly engages in a conduct that materially aids forms of gambling activity"--in this case, profiting from a business that facilitates sports betting.

Smith also argued that amendments to the state constitution have legalized specific forms of gambling, but prohibits the legislature from authorizing other forms of gambling unless a majority vote in a special election calls for doing so.

Despite Dunn's efforts, a ruling handed down Tuesday by Superior Court Judge Salem Ahto sided with Smith and denied Dunn's request, citing an amendment to the state constitution that identifies gambling that is legal in the state of New Jersey, such as Atlantic City casinos, state regulated racetracks and state lotteries. The absence of a specific law regarding Internet gambling, he added, does not make it legal.

Frank Catania, president of Catania Consulting Group and former director of The New Jersey Division of Gaming Enforcement, said Drakos' defense was not plausible.

"Generally speaking, the only gambling that I could ever say was legal in New Jersey is gambling that takes place in Atlantic City, where, specifically, we had a constitutional amendment that changed it," Catania said. "Our constitution is very clear. You can have gambling in Atlantic City. You can have the lotteries; but you can’t do it anywhere else. There's nothing else you can do about it."

The New Jersey Legislature is currently looking at two bills related to Internet gambling. Senate President Richard Codey, D-West. Orange, is sponsoring S1013, which would amend the definition of illegal gambling to include Internet gambling.

The other bill, AJR66, introduced by Assemblyman Joseph Azzolina, R-Middletown, would establish a 21-member Internet gaming commission to recommend a course of action regarding online gaming in New Jersey. Both were introduced in early 2004; neither has seen any action in the legislature.

Catania believes the Drakos case is an isolated incident and that although it is the first case of this nature in New Jersey, it has nothing to do with the proposed bills.

"This is not that much of an Internet gambling case because, first of all, he was not an operator," Catania said. "He's more or less an affiliate, and he was just bringing people to the site"

He added that Drakos should have avoided meeting with bettors, taking money from them and showing them how to use the site.

Drakos is due back in court later this month. The Prosecuting Attorney's office has offered a plea deal that would send Drakos to a state prison for up to four years.

Neither Dunn nor Smith could be reached for comment.

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