New York Judge Rules Against Net Gambling

27 July 1999
Online gambling took a hit Monday when the New York state Supreme Court ruled that an Internet casino with servers based in Antigua violated U.S. law by accepting wagers from state residents.

In a 20-page opinion, Manhattan Supreme Court Justice Charles Edward Ramos said that World Interactive Gaming Corp.'s Internet site is illegal because its computer is located in New York, a violation of the state law prohibiting gambling.

"It is irrelevant that Internet gambling is legal in Antigua," Ramos wrote. "The act of entering the bet and transmitting the information from New York via the Internet is adequate to constitute gambling activity within the New York state."

Calling the decision "ludicrous," WIGC CEO Jeff Burton argues that no computers in New York were used to take any bets. He also stresses that no bets were taken over the company's 800 lines.

World Interactive Gaming, according to Ramos, has been under investigation by the New York Attorney General's office since February 1998, and in June 1998 an investigator logged on, downloaded gambling software from the site, opened an account and placed wagers online.

Ramos said that customers were asked for their permanent address, which would be used to accept or reject wagers, depending on whether or not gambling is legal in those jurisdictions. The investigator, logged on in New York and filled in Nevada as his permanent address, which made him eligible for gambling on the site.

Burton pointed out that it was the investigator who broke the law by falsely claiming they weren't in New York. "We did all that we possibly could to stop New Yorkers from gambling," he said. " I know in my heart that we didn't do anything wrong."

According to Ramos, the activities of World Interactive Gaming are covered by the Federal Interstate Wire Act, the Travel Act and the Wagering Paraphernalia Act. In addition, they are covered in New York's ban on gambling, he said.

The attorneys representing World Interactive Gaming, the Farmingdale firm Kirk Medina Maelo Pontillo & Colleluori, expect the decision to be appealed.

Attorney J. Colleluori said that the validity of Internet gaming "will not easily be decided until [the U.S.] Congress acts."

The court also found World Interactive Gaming liable for violating state securities laws when it failed to register with the State Attorney General before selling securities, and for failing to disclose that 46 percent of investors' funds would be used to pay the company's commissions, salaries and consulting fees.

There will be a hearing on September 9 to schedule proceedings to determine the amount in restitution, penalties and cost required from World Interactive Gaming.

WIGC's legal problems started in July 1998 when New York Attorney General Dennis C. Vacco froze the company's assets for allegedly defrauding investors, another action that Burton disputes. "There were no complaints from any of the investors," he explained. He also suggested that there's no way to disprove the company's extremely high financial projections, which brought about the allegations.

Burton remains confident that WIGC, which previously operated Golden Chips Casino, will be allowed to conduct its business in the future. "Believe it or not, I still have faith in the system," he said.

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