Q & A: Alessandro Naschitz

After an Israeli Magistrate Court ruled on Jan. 29 that extraterritorial I-gaming operators targeting Israeli residents fall within the jurisdiction of Israeli law, questions have arisen as to how the decision was reached. The case involved Victor Chandler International (VCI) CEO Michael Carlton, who in early January traveled to Israel at the invitation of (as yet) unidentified government officials, allegedly to discuss VCI's operations in the country. On Jan. 11, he was apprehended by Israeli authorities under suspicion of organizing and managing illegal gambling in Israel.

IGN asked Alessandro Naschitz, of Naschitz Brandes, a leading Israel-based law firm, to offer a written synopsis of the case.

IGN: Many industry observers are struggling to get a sense of the I-gaming decision recently handed down in Israel. Can you offer your interpretation of the case?

Naschitz: Michael Carlton of VCI had been detained by the Israeli police. The police later agreed that the suspect would be released on bail, and allowed to depart Israel. On Jan. 29, 2007, Magistrate Abraham Heiman, of the Magistrate Court in Rishon Le-Zion, issued a decision analyzing the illegality in VCI's activities within Israel.

The suspect argued that Israel does not have jurisdiction, and cannot sanction or punish VCI.

The Magistrate made the following findings of fact:

• VCI is a company located outside of Israel, and its server is based in Gibraltar, also outside of Israel;

• Its Web site, VC Casino, offered content in Hebrew, which is a language spoken mainly in Israel;

• VCI and its VC Casino Web site made available to the public the possibility to gamble for real money … on the results of sports games between Israeli sports teams, sometimes on the results of obscure teams (the Magistrate made the assumption that some Israeli sports teams are not known to people outside of Israel);

• The evidence (including the suspect's statement to the Israeli police) shows that VCI had aggressively marketed and advertised the Web site within Israel--that also included the marketing of VCI's Web site on some Israeli websites. The Magistrate concluded that that type of marketing was a triggering, motivating factor for residents of Israel to play on the VC Casino site.

The playing, the organizing, and the advertising of Prohibited Games are illegal. A Prohibited Game is a game that is predominantly a game not of skill. Under Israel's penal code, an offense is considered committed within Israel even if only a small part of it was performed within Israel. According to the Magistrate, the Israeli gamblers do not exist in a vacuum; they do not exist without the organizer of the game, and vice versa. There is a "co-dependency," and the relationship is "symbiotic."

The court's conclusion is that an offense was committed in Israel. It is the accumulation of the factual factors which led the Magistrate to his conclusion.

Regarding the issue of the offense having been committed in Israel, the Magistrate examines the purpose of the legislation, which is the social interest of protecting the public from gambling. According to the Magistrate, "It is a known fact, which requires no evidence to prove it that gambling has a tendency to an addiction, just as any other addiction."

Moreover, the Magistrate argued that, in the Internet era, geography and physical distance gradually lose any meaning. The location of the server outside of Israel is insignificant and negligible.

The Magistrate reviewed court decisions such as the LICRA vs. Yahoo!, The People [of New York] vs. World Interactive Gaming Corp. and United States vs. Jay Cohen to support his decision.

Alessandro Ethan Naschitz graduated from the New York University School of Law and is admitted to practice in New York and in Israel. He is a partner at Naschitz Brandes in Tel Aviv, specializing in Internet and gaming, complex international commercial transactions and litigation, insurance law and tobacco litigation.