A civil suit filed yesterday against three Internet casinos by the New Jersey divisions of Gaming Enforcement and Consumer Affairs could supply answers to a few very important questions that have dogged U.S. legal authorities and I-gaming operators for years: Where do gambling transactions take place and should interactive gambling activities be regulated or banned?
In the court documents, filed yesterday in the Mercer County Superior Court, Chancery Division, the state accuses the three sites--Alohacasino.com, 7sultans.com and Royalclubcasino.com--of violating New
Jersey law by accepting wagers over the Internet from New Jersey residents, advertising illegal practices in New Jersey and accepting wagers from underage gamblers in New Jersey.
(The advertising issue is nothing new for at least one of the sites. Aloha Casino attracted the attention early last year of Wayne County Sheriff Robert Ficano after he realized the site was promoting its services through a billboard placed outside Detroit along a major expressway. At the time, Ficano sought the removal of the advertisement and even considered legal action against the site.)
The state is also seeking to enjoin the defendants from advertising their services within the state or from accepting any more wagers from New Jersey residents. In addition, officials are asking for an accounting of all money won from New Jersey residents over the past year and that the defendants
restore any money or property acquired through any alleged illegal practice.
Whether the defendants can even be served remains questionable. One suit, listed as State of New Jersey v. Royalclubcasino.com, Global Interactive, Ltd, and John and Jane Does, highlights the difficulty in tracking down the owners of the offshore Internet business that's named. If serving the
defendants is problematic, then how the plaintiff intends to collect fines of up to $7,500 for each violation of the Consumer Fraud Act, as outlined in the court documents, looks to be virtually impossible.
Another intriguing facet of the cases is language referring to jurisdiction, which reads, "The situs of gambling activity in an online casino is where the bettor is located when he or she logs into the Internet casino, enters the wagers and makes gambling-related decisions."
According to current U.S. case law, it's still unclear where Internet gambling activity actually occurs. Yet establishing where an e-commerce transaction takes place was an important consideration for member nations of the Organization for Economic Co-operation and Development (OECD), which in December released a report titled "Clarification on the Application of the Permanent Establishment Definition in E-commerce." While this document was prepared primarily to establish where an e-commerce activity occurs for taxation purposes, it clearly places an electronic transaction as taking place on the site's server.
Assemblyman Tony Impreveduto, who introduced a bill that would permit New Jersey's licensed land-based casinos to offer their games over the Internet, says the outcome of the lawsuits will provide much needed answers. "The lawsuit will certainly bring attention to Internet gaming," he said, "and may begin to answer the question as to where the gaming take place--at the computer in a home or at the location of the server. It will also highlight the need for regulation."
Keith Furlong, deputy director of the Interactive Gaming Council, echoed the sentiment. "While the Internet poses many challenges to state governments such as New Jersey, " Furlong explained, "I believe creating a regulatory framework for Internet gaming is a better solution than utilizing valuable resources and taxpayer monies on civil suits."
Several companies were named in the suits as well: Global Interactive (in association with Royalclubcasino.com); Godfrey Volk and Antonio Cheng (in association with Alohacasino.com); and Bob Fontain (in association with 7sultans.com).