The one common thread among the recent criminal complaints against online gambling operators was clear....they were all US citizens. Thanks to Kevin Doty of Lionel Sawyer and Collins, IGN explores the legal basis for the feds going after their own who are operating offshore. Check out this
jewel from the recent Internet Gambling Report II.
Federal Criminal Jurisdiction
Personal Jurisdiction Based On Citizenship
Even without a finding of personal jurisdiction sufficient for a state to prosecute an Internet gambling operator, the federal government may assert extra-territorial jurisdiction in limited circumstances. Unlike territorial jurisdiction, where a country may both apply its laws to certain conduct and enforce those laws, extra-territorial jurisdiction means only that a country may apply its laws to conduct occurring outside of its territory. To enforce those laws, it must wait for the individual to return to its territory, or have him or her returned by another nation (i.e. through extradition. Exercises of extra-territorial jurisdiction must be permissible under international law, and must be provided for under the law of the country asserting jurisdiction. 114 International law recognizes four bases for extra-territorial jurisdiction:
- National, where the nationality of the offender serves as the basis for jurisdiction
- Protective, where an injury to national interest serves as the basis for jurisdiction;
- Universal, where physical custody by any forum of the perpetrator of certain offenses considered particularly heinous and harmful to humanity serves as the basis for jurisdiction; and
- Passive Personal, where nationality of the victim serves as the basis for jurisdiction.
The second and third bases for extra-territorial jurisdiction, i.e., protective and universal, would not appear to apply to Internet gambling. Despite some negative commentaries on gambling, the potential injury caused by Internet gambling is unlikely to rise to the level of injuring the "national interest" or considered particularly heinous and harmful to humanity."
The third basis, passive personal, also should not apply (if the games are not fraudulent) because the layer voluntarily participates in the gambling transactions. Even if a home user is a "victim" of the gambling operator, "passive personal" is an unpopular basis for extra-territorial jurisdiction and applies only to "serious and universally condemned crimes."
The first basis, nationality, can apply to Internet gambling. The United States can exert jurisdiction over its citizens for conducting gambling anywhere in the world despite that the activity is legal in the place where it is being conducted. For example, under federal law, U.S. owned or operated aircraft cannot offer in-flight gambling even between two foreign cities.
In the United States, there is a presumption against the extension of extra-territorial jurisdiction. Therefore, if the federal government wants to extend extra-territorial jurisdiction to Internet gambling, it must do so by amending general law to explicitly extend to operating an Internet site outside of the United States.
Nationality can also serve as the basis for federal law enforcement officials to prosecute individuals involved in the management, operation and ownership of Internet gambling sites, including officers, directors, shareholders and managers of the gambling business.
Applying federal laws to Internet gambling conducted by American citizens does not present a personal jurisdiction problem for the United States government. American citizens and American corporations are always subject to the personal jurisdiction of the United States.
Under these circumstances, the Internet may create a venue problem for the federal government due to a criminal defendant's Sixth Amendment rights. Venue refers to the particular place where the defendant can be required to defend the action. For example, if a person commits wire fraud between Nevada and New Jersey, venue will decide if it is appropriate whether he can stand trial in Nevada, New Jersey or in either place. Individual states, on the other hand, may face difficulties when attempting to assert criminal jurisdiction over defendants whose Internet gambling operations are based in other states.
If a state cannot assert personal jurisdiction over nonresident Internet gambling operations, federal laws could be used to apply state gambling laws and policies to nonresidents. Some existing federal laws, such as the federal antigambling statute, 18 U.S.C. §1955, already incorporate a violation of state law as a predicate for the federal offense.
Using federal law to enforce state and local policies is not a new concept. In the gambling context, it has been most visible in the area of FCC regulation of state lottery advertising. Pursuant to 18 U.S.C. §§1304, 1307, a television or radio station may not broadcast advertisements for state lotteries unless the station is licensed to a location in a state that conducts lotteries. The United States Supreme Court has held that this crude approach does not violate the First Amendment because it advances the antigambling policies of non-lottery states.