Last week an online sports bettor named Jeffrey Trauman pleaded guilty to violating a North Dakota state law that prohibits gambling. Trauman received one year of probation and was required to pay a $500 administrative fee. The North Dakota statute does not discriminate between traditional gambling and online gambling, but a handful of U.S. states do have laws that specifically prohibit online gambling. Prior to the Trauman case, however, no state had ever taken action against the casual online gambler.
The case (to the best of our knowledge) marks the first time a casual bettor has been brought up on charges in the United Sates for gambling on the Internet. Naturally, it raises questions over whether it sets a precedent for further legal activity of this nature.
We asked the experts:
Should online bettors be concerned that an onslaught of investigations and prosecutions is imminent or is the Trauman case a fluke?
 |
Paul Hugel:
"The prosecution of Mr. Trauman seems to me to be more of an anomaly than the start of any trend."
|
|
Paul Hugel: The prosecution of Mr. Trauman seems to me to be more of an anomaly than the start of any trend. Many states have statutes, like that of North Dakota, which criminalize the making of a casual bet. Two that come immediately to mind are California and Florida, both of which have statutes which are even harsher than the North Dakota statute Mr. Trauman was charged with violating. These statutes have been on the books for almost a hundred years but, as far as I can tell, have rarely, if ever, been enforced against casual bettors. While Mr. Trauman is reported to have been an avid gambler, and his activity may have made him something other than a casual bettor, it is very surprising to see a statute such as this being enforced against anyone other than a bookmaker.
The reality of the situation is that laws against placing sports bets (not to be confused with laws against bookmaking) are treated like statutes criminalizing adultery or fornication. They exist on the books and may be dusted off from time to time for some special purpose, but in general, they are not charged by prosecutors. I would assume that this is because prosecutors think that juries would be reluctant to convict or because enforcement would be viewed as wasteful of prosecutorial resources.
That is not to say that these laws serve no function from the government's perspective. They may be useful for breaking up a professional bookmaking operation or to exert pressure on a defendant to accept a plea offer when there is insufficient evidence to support other charges. I suppose they also send a message that society does not condone gambling--a message which is a bit hard to reconcile with the simultaneous governmental promotion of state lotteries.
Putting aside the questionable societal value of these laws, I would not expect them to disappear any time soon. Criminal laws have a way of remaining on the books long after they have ceased to be enforced. I am told that English law still requires all men to own long bows and to practice archery two hours per week under threat of imprisonment.
Paul Hugel is a partner at the law firm of Clayman & Rosenberg in New York City. The firm represents persons and business in all areas of litigation with an emphasis on white collar criminal litigation, regulatory investigations and commercial litigation. Mr. Hugel can be reached by e-mail at hugel@clayro.com.
|
Martin Owens:
"This perfectly illustrates just how silly our gambling laws have become."
|
|
Martin Owens: Mr. Jeffrey Trauman has been fined and put on probation for violating North Dakota’s gambling laws. Because he bets on the Internet, the notion has arisen that there will soon be some kind of massive push against Internet gambling, and that people who place bets online are now in danger of being hauled off screaming. Nothing could be further from the truth!
To begin with, gamblers, as opposed to the people that run the gambling, are not a particular target. It is the declared policy of the federal government not to prosecute people simply for making bets. Many of the states have no law against it either. In those states where it is illegal, the mere act of gambling, in and of itself, is only a misdemeanor. And that's if they catch you at it.
Now, how are the state cops supposed to find out that John Doe has been gambling online? There are only three ways. They can go through his financial records, credit cards and such, to see if he has made any money transfers to gambling businesses. They can tap his line. But to do either of those things, the authorities need a search warrant. But to get a search warrant the cops have to go to a judge, and show that they have some kind of probable cause to believe that illegal activity is taking place. And how can they get that, without peeking at his financial records or Internet activity in the first place? It’s Catch-22, and it’s in favor of the little guy for once.
So, the only practical way they will ever know if John Doe has been gambling online, is if John Doe walks up and tells them. Or perhaps somebody else rats him out. In this case, Mr. Trauman seems to have identified himself as an Internet gambler on his tax returns. This in turn apparently triggered a response from someone in the attorney general's office who had nothing better to do. ( I was told , in law school, that information from tax returns cannot be used to initiate non-tax criminal charges. I didn't believe it then and I absolutely don't believe it now.) The point is, there is no reliable lawful method of conducting regular, broad-based searches of the general public for this kind of thing. Either they come across the information by accident, or it's volunteered.
Let's take a minute and look at what the North Dakota law says. A bet in North Dakota is legal, provided it's a social game and the bet is $25 or under; $26- $500 is a minor misdemeanor; over $500 can bring fines and jail time (North Dakota Century Code, Section 12.1-28-02(1). So, the offense is not about betting on the Internet at all! There is no specific law against it--in that state, anyway. His offense was to bet at something that could not be described as a "private game" or "social game," and to bet too large an amount.
This perfectly illustrates just how silly our gambling laws have become. Their alleged purpose is to protect the bettor from himself--that without the government to look out for him, he will gamble away his house, home, and living, and become a wretched pauper. But just consider: Even under this statute, Mr. Trauman would have been perfectly within the law to bet himself into the poorhouse 50 times over, so long as he did it in small increments! Make $25 bets on eight games a day, or eight hands of poker; that's $1,400 a week, $5,600 a month, $70,000 a year. And all legal per North Dakota law, at least until he starts robbing banks to pay for it.
Why, then, did Mr. Traumann draw the wrath of officialdom? Surely he's not the only online bettor in the state. If I was to bet on it, I'd say it's precisely because he didn't go broke and wind up starving in the snow. He won! He made a living at this and let them know it! If there's one thing that the powers that be can't stand, it's somebody who goes against their wishes and prospers by so doing. And so, they waited until his house was for sale, and they brought the accusation at the time best calculated to really jam him up. It was petty, mean and completely unnecessary; after all, he was in the process of leaving the state anyway! But it's just the sort of thing we've come to expect from all those folks who know what's good for us.
The courts of North Dakota have made it clear that they don't exactly consider this the case of Jack the Ripper, either: they gave him a $500 fine and unsupervised probation. It's the same thing you get in Sacramento for going through a stop light. He can still serve on a jury and vote after this, never fear.
So, is this the first step in the nationwide campaign against Internet players? Not hardly! Unless a particular bettor does something to attract attention to himself, practically dares them to come after him, it's not worth their while. If they catch him doing something else, and gambling while he does it, they might tack on the gambling as an extra charge, but as a general proposition nobody is going to mobilize Star Wars technology to bring in a lousy misdemeanor pinch.
What do I recommend? A little caution. It won't hurt to check out the local laws once in a while if you think they disapprove of your hobbies. And be careful to describe your activities in terms that won’t put the gendarmes in heat.
Martin Owens is an attorney who specializes in the problems of operating gambling businesses online. Services emphasize strategic planning and preventive action in such areas as legal compliance and proper corporate structuring, as well as contracts, intellectual property protection, technology transfer, domain names, and the assorted other ramifications of operating online. Feel free to address questions and comments to mowens@trade-attorney.com.