Dow Jones Case Could Affect I-Gaming

14 June 2002

A defamation case in Australia could have far reaching implications on the Internet gambling industry.

An odd set of circumstances surrounding the case, Gutnick v Dow Jones, could change the way Web sites of all kinds are operated.

The case, in which well known Melbourne businessman Joe Gutnick filed suit against the Dow Jones Publishing company for publishing a story in the United States and accessible over the Internet, has established a new level of cross-border litigation.

The case may create a precedent for claims of defamation being brought across jurisdictional boundaries, including in other countries where actions for defamation are recognized.

The court was asked to consider whether the action could be brought in Victoria, given the claim involved material published on the Internet by a Web server located in the United States

The court held that the claim could be heard in Victoria on the basis that the material was available to be downloaded and read in Victoria and that was where Gutnick suffered the most harm. The publication was likely not to be defamatory in the U.S.

Dow Jones publishes popular financial publications, including the Wall Street Journal and Barrons Magazine.

An article titled "Unholy Gains" appeared on Barrons' Web site in October 2000.

Gutnick has a reputation in philanthropic, sporting and religious circles and he is an international entrepreneur with substantial connections in the United States.

He claims that the article alleged he was the biggest customer of the global money-launderer and tax evader Nachum Goldberg. The article also alleged that Gutnick was masquerading as a reputable citizen when in fact he was a tax evader who had laundered large sums of money through Goldberg, and that he had bought Goldberg's silence.

Central to the lower courts, the Victorian Supreme Court and the Victorian Court of Appeals, the High Court found that the Internet article in question was "published" in Victoria. It ruled that "the better view would appear that the information is published in both places at the same time."

What does any of this have to do with online gambling?

A lot, once the layers and intricacies of the case are studied more closely.

Dow Jones is appealing the decision to overturn the finding that something is published where it is received. This has implications for both online wagering operators for two reasons.

The direct implication is that an online gaming operator publishes wagering information on its site. This information is often prohibited by statue in most jurisdictions, either outright or only for licensed operators in that jurisdiction.

A parallel issue is the question of where a bet takes place. Is it where the bookmaker or casino operator is located, or where the punter is located? If courts are ruling that the publishing of articles takes place where they are received, as they have in this case, it could spell trouble for online gaming operators.

If the Dow Jones case is used as precedent, a strong argument could be made that a bet, wager or gaming activity over the Internet actually takes place in both locations, where the server is located and where the bettor is located.

Dow Jones' argument was that liability for defamation in cyberspace must be determined by the jurisdiction of the Web site. They insisted there was no publication by Dow Jones in Victoria by merely putting Barrons on an Internet site accessible in Victoria and that it would be unfair for the publisher to have to litigate in the multitude of jurisdictions in which its statements are downloaded and read.

However, the court found those considerations must be balanced against the worldwide inconvenience caused to litigants, "from Outer Mongolia to the Outer Barcoo," frequently not of notable means, who would at enormous expense and inconvenience have to embark upon the formidable task of suing in the United States

The court considered a number of earlier cases relating to the appropriate jurisdiction for defamation claims. It appears, from the cases considered that there is a developing line of authority which supports the proposition that claims may be brought in the jurisdiction where the material is received, regardless of where the web site host is located.

Tim Ryan, a spokesperson with the Registered Bookmakers Advisory Council in Australia and an expert on the Internet and e-commerce law, said the Dow Jones case likely won't have ramifications in the interactive gaming industry regarding where a bet takes place, but he does feel that online bookmakers could be scuttled if portions of the findings are applied to the gaming industry.

The Dow Jones appeal was heard by the Full Bench of the High Court, Australia's version of the U.S. Supreme Court. The High Court will reserve its judgement, and Ryan said no one knows how long that will take, but there will be no more hearings or submissions.

Click here to view a copy of the case.

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