Should the recent indictment of a New Jersey businessman arrested for running an online gambling affiliate site be a cause for concern among those who offer similar services?
A New Jersey Superior Court judge last week upheld the indictment of Nicholas Drakos, who is charged with promoting gambling, conspiracy and money laundering for activities carried out between January and April of 2004.
Drakos' attorney argues that New Jersey's constitution did not expressly name Internet gambling as an illegal form of gambling. Furthermore, Drakos said he did not know that what he was doing was illegal.
Judge Salem Ahto denied a motion to have the indictment dismissed, saying that Internet gambling is illegal despite there being no mention of it in the constitution, which explicitly states that state lotteries and Atlantic City casinos are the only legal forms of gambling.
Of particular significance is that the defendant was an affiliate, and IGN wanted to know what the ramifications are for affiliates operating similar Web sites in the United States.
So we asked the experts:
In light of the Drakos case, are those who operate similar sites now on the Justice Department's radar?
 |
"These types of actions, if successful in state courts, could, in the future, serve as the predicate for federal violations. And every time these occur, I think the industry should pay attention."
|
|
Anthony Cabot: My feeling is that affiliates--and anybody else who is in the online gaming industry--need to be aware that you have to comply with both state and federal laws and that the state laws vary greatly. Those who are involved in activities here in the Unites States need to be particularly cautious that they're in compliance with state laws because they have a physical presence and are much more amenable to criminal prosecution.
I don't think this is a Justice Department issue at this point. However, some of the federal statutes that they could rely upon, including the Illegal Gambling Business Act and the Travel Act, require a violation of a state law as a predicate to the federal violation. Therefore, these types of actions, if successful in state courts, could, in the future, serve as the predicate for federal violations. And every time these occur, I think the industry should pay attention.
Anthony Cabot, a partner for Lewis and Roca LLP, specializes in government relations and administrative law, with an emphasis on gaming law and Internet gaming. He practices out of Las Vegas.
|
" I recommend to my clients to stay away from all types of sports wagering because it could easily be said that that's illegal."
|
|
Frank Catania: I think this is an isolated incident. First of all I don't think they will be going after any operators. I don't think they can go after any operators. They've been hanging their heads on the Wire Act, which is questionable, in my opinion.
I don't know how questionable it is anymore though, since In Re MasterCard basically said it does apply to sports wagering, but it does not apply to casino-style wagering. However, back in the late '90s, the National Association of Attorneys General said that the Wire Act should be amended if they want it to prohibit Internet gambling and take out all reference to wire communications and all reference to sporting bet
I recommend to my clients to stay away from all types of sports wagering because it could easily be said that that's illegal. Casino-style wagering I don't recommend anybody do in the United States. It all has to be outside the U.S., and if they are U.S. citizens, I recommend they not take bets from inside the U.S.
Frank Catania is the principal of Catania Consulting Group Inc. and a partner in the New Jersey-based public-affairs firm of Catania, Furlong Snyder Public Affairs LLC. He is a former assistant attorney general and director of the New Jersey Division of Gaming Enforcement.