Widespread panic throughout the I-gaming industry following the July arrest of ex-BetonSports CEO David Carruthers had been somewhat subdued by the notion that it was an isolated incident. But now that a second company has been targeted (Sportingbet Non-Executive Chairman Peter Dicks was picked up last week in New York), should there be concern that more arrests will follow?
IGN asked the experts:
Is the Dicks arrest evidence that the United States has launched a full-scale attack on Internet gambling?
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"In law, as in life, success brings imitation, and I would be surprised if prosecutors' collective efforts to impede online gaming efforts stop here."
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Ken Dreifach: Perhaps not a full-scale attack; but certainly an aggressive border conflict. For years, many prosecutors, myself included at the time, believed that prosecutions against foreign gaming operators were futile, and that foreign entities would simply ignore or contest the validity of U.S. action. We were all wrong. The swift corrective response of BetonSports--pulling out of the U.S. market--has likely given prosecutors more confidence about pursuing online gaming sites, even absent their presence or assets in the U.S. In law, as in life, success brings imitation, and I would be surprised if prosecutors' collective efforts to impede online gaming efforts stop here.
Ken Dreifach is one of the country's foremost Internet lawyers, with unique experience in the government sector. Until the end of April, he was chief of New York Attorney General Elliot Spitzer's Internet Bureau, which coordinates statewide law enforcement efforts regarding online consumer fraud, privacy, securities trading, gambling, access for the disabled and other Internet-related issues. He joined the law firm of Sonnenschein Nath & Rosenthal (where he now counsels clients on their rights under proposed I-gaming laws) as partner on May 15. He also chairs the Information Law Technology Committee.
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"What will happen if they continue? Executives from gaming companies will stop traveling to the U.S. but continue allowing wagers to be placed from here."
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Frank Catania: I don't believe this is a wider campaign against the online gaming industry. I believe that some eight states have passed legislation that prohibits online gaming. In my opinion, the states have more of a right than the federal government to regulate or prohibit online gaming since gambling has always been a right left to the individual states. This indictment was handed down in May 2006, and it is surprising that it is against a non-executive director and not the company, which is a publicly traded company in the U.K.
What will happen if they continue? Executives from gaming companies will stop traveling to the U.S. but continue allowing wagers to be placed from here. Even though there are only eight states that prohibit online gambling, the full faith and credit clause of the Constitution would allow those states to have law enforcement officials in other states detain these foreign nationals if they are associated with companies that provide online gambling within their state.
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 .
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"I don't think this is a major expansion of enforcement operations; it's more the result of a single individual's mistake."
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I. Nelson Rose: I don't think this is a major expansion of enforcement operations; it's more the result of a single individual's mistake. My guess is that Louisiana has arrest warrants out for every top level executive working for an Internet gaming. Federal prosecutors are not going to waste their time and resources making cases and getting grand jury indictments on everyone since they would assume that after the first arrest (Carruthers), no other executive would show up in the U.S. If anyone was foolish enough to change planes at JFK, they will find out through passport control, arrest him using the solid anti-Internet gambling law of Louisiana and then take a few weeks to make a federal case against him and the company.
Professor I. Nelson Rose is an internationally known scholar, public speaker and writer and is recognized as one of the world's leading authorities on gambling law. A 1979 graduate of Harvard Law School, he is a tenured full Professor at Whittier Law School in Costa Mesa, California, where he teaches one of the first law school classes on gaming law. Professor Rose is the author of more than 300 books, articles, book chapters and columns. He is best known for his internationally syndicated column Gambling and the Law.