Crackdown on I-Gaming Ads - Not Everyone's Flinching

3 October 2003

The I-gaming industry has been relatively quiet about recent actions taken by a U.S. attorney against online gambling advertisers, but those who are speaking say the case doesn't hold very much merit.

"I doubt Elliot (Spitzer) has ever ridden on a city bus before. He is more than welcome to come on a BetOnSports bus, and we can discuss the issue further."
- David Carruthers

Costa Rican online sports book has been one of the most aggressive offshore bookmakers when it comes to advertising through the mainstream U.S. media. The group's CEO, David Carruthers, said the grand jury investigation in the Eastern District of Missouri has affected their operation only slightly.

Interactive Gaming News on Tuesday obtained a copy of a subpoena issued to a portal owner who accepts advertising for online casinos and sports books.

The scope of the investigation remains unknown, but as details trickle in, it appears the federal government is trying to gather as much information about the interactive gambling industry as possible.

By Carruthers' account, authorities appear to be targeting media outlets as well. Five radio stations, two in Missouri and three in the state of Washington, he said, have pulled advertisements for BetOnSports.

"They were relatively small stations," he said of the stations that pulled the ads. "They decided to stop running them after unsolicited and unwarranted contact from various law enforcement officials."

Whether the five stations' decisions to pull I-gaming ads were related to the grand jury investigation isn't known.

What is known is that BetOnSports will continue to advertise its services in the United States, and Carruthers, who referred to pressure from the justice department as "scare tactics," said the First Amendment gives them right to do so.

BetOnSports still has a network of more than 300 U.S. radio stations and a handful of national media outlets through which it advertises its services.

"I am very pleased to say it is business as usual," Carruthers said. "All of our national advertisers, including Howard Stern, Jim Rome and Lycos, are behind us 100 percent."

News of the grand jury investigation came the same week BoS announced a deal with the Transportation Authority in New York through which 250 New York City buses will carry advertisements for the site this month.

The deal might be the boldest yet for BoS, considering Elliot Spitzer, the attorney general of New York, has a track record for going after businesses that facilitate interactive gambling.

Carruthers said BoS is spending $4 million to market its site in the New York area alone this year and expects the marketing to pay off in big numbers with new users.

"I doubt Elliot has ever ridden on a city bus before," he said. "He is more than welcome to come on a BetOnSports bus, and we can discuss the issue further."

"This is just a big fishing expedition, and they know it. Advertising doesn't constitute aiding and abetting and it never has."
- Martin Owens
Attorney at Law

Martin Owens, a lawyer who represents I-gaming clients, said the U.S. attorney in Missouri has no legal grounds to go after I-gaming advertisers .

"This is just a big fishing expedition, and they know it," he said. "Advertising doesn't constitute aiding and abetting and it never has."

Owens cited a U.S. Supreme Court case from 1999 that he said should clear any doubt as to whether gambling sites can advertise in the United States. The court ruled in Greater New Orleans vs. the U.S. that a state couldn't block gambling advertisements if gambling is legal in the state the operator is located.

"If gambling is legal in New Orleans, you are free to advertise it in Texas," he said. "(Therefore), if online gambling is legal in Costa Rica or Antigua, then you can advertise it anywhere in the states you want."

The subpoena, issued by the United States District Court in the Eastern District of Missouri, asks the operator to turn over all commercial and financial information from Jan. 1, 1997 to the present related to the advertisement of online casinos and sports books.

Among information requested in the subpoena is all the "names and all identifying and contact information you have for every point of contact for each such gambling advertiser."

The subpoena also calls for the turning over of any information about advertisements placed on TV, radio or cablecasts. The court asks for any accounting records including accounts receivable or accounts payable. They also ask the portal to turn over records of sales calls, telephone records, contracts, invoices, records of negotiations pertaining to payment, e-mail correspondence (both incoming and outgoing), financial transactions, annual gross revenue for the site, information on how advertising revenue was received and the names of financial institutions and account numbers pertaining to the business.

Owens feels the grand jury investigation is the latest ploy on behalf of a political administration that would like to see online gambling outlawed, but can't effectively figure out a way to do it.

"If you don't like the cards that are dealt to you, kick over the table," he said. "And if you can't shoot down the eagles shoot down the sparrows."

Nobody knows where Kevin Smith came from. He simply showed up one day and started writing articles for IGN. We liked him, so we decided to keep him. We think you'll like him too. Kevin can be reached at