Article on Advertising Online Gambling and the Subpeonaes
From - http://www.trade-attorney.com/
STRONGARM TACTICS:
Balked of Offshore Prey, Federal Firebrands Resort to Bullying U.S. Advertisers
If you dont like the cards in your hand, kick over the table; if you cant shoot down the eagles, slaughter the sparrows instead. And it doesnt matter what the law really says as long as you got the power. What kind of philosophy is that? It would seem to be the central vision of the Eastern District of Missouris campaign against Internet gambling. This ongoing performance is an object lesson in why it is dangerous to allow prosecutors too much power with no checks or balances.
Following the failure of a previous bid to prosecute the Coeur dAlene Indians of Idaho for their online lottery, ED Missouri struck gold in California. In the spring of this year it threatened PayPal, and its San Francisco parent E-Bay, with prosecution, under the so-called Patriot Act, for processing online gambling transactions. A $10 million dollar Settlement (you and I would call it a fine without a hearing) was handed over by E-Bay, which was getting out of the gambling business anyway.
Why did Missouri DAs need to act when Californias and Idahos did not? What gave Missouri the right to prosecute at all? Briefly, because Internet transactions necessarily involve interstate commerce and telecommunication, it could be alleged that Missourians were subject to any harm caused by such activities. In real life, of course, this pious fiction is an excuse for pushing the jurisdictional envelope to the limit. How can ambitious Federales in Missouri, with a population of five and half million, feel their flock is somehow threatened by Internet gambling, while their colleagues in California, whose population is over thirty million, detect no such menace? Nevertheless, the action had just enough credibility to make it dangerous - or at least safer for Ebay to just settle.
And as the line in the horror movie goes - theyre ba-a-ck!
Advertisers who feature ads for offshore gambling sites are now being subpoenaed by ED Missouri. On what basis? For what crime? Nothing is public yet.
A LETTER OF INTIMIDATION
Fortunately we already know the governments line of attack. It is now apparent that ED Missouri is not a cowboy jurisdiction with a rogue agenda, but the point man for the Department of Justices Internet gambling policy as a whole . On June 11th, the Department of Justice contacted the National Association of Broadcasters, with what can only be called a letter of intimidation. It told them that 1) Internet gambling is illegal in the United States and that 2) carrying advertising for it makes the advertiser equally a felon under U.S. law.
In plain English: baloney.
IGNORING THE FACTS
Internet gambling illegal in the US? No less than twenty-six states license some form of online access, operated by such services as TVG and YouBet!, for placing bets on their horse races. In ten states- California, Idaho, Indiana, Kentucky, Louisiana, New York , North Dakota, Ohio, Oregon and Wyoming- the process is completely interactive, all done on the Internet. The others use Internet or TV displays to enable phone bets. Now the last time I looked, betting on horse races was gambling; doing it online means Internet gambling; and since these operations are state licensed, and therefore legal, someone betting at them is NOT violating the Wire Act or the racketeering laws. Further, the Virgin Islands are issuing licenses to set up online gambling facilities on its territory, pursuant to laws it was fully authorized to enact. So the DOJs first assertion is contrary to the facts!
IGNORING THE LAW
The threat that the government is holding over the heads of advertisers is 18 USC Section 2. In relevant part, that statute says Whoever....aids [or] abets [an offense against the United States]... is punishable as a principal. According to the DOJ, someone who handles advertising for gambling that may be illegal, is equally a violator of gambling laws, and thus subject to the same penalties.
But statutes are not interpreted by the whim of prosecutors. Case law provides the guidance, and Federal case law does not say what the DOJ wished it did. In order to be charged as a principal to a crime, it is not enough merely that you know the law may be broken ( and Internet gambling may or may not be breaking the law, as we have seen, even in the USA!). You must have purposefully participated in the deed, in an active way, with an eye to making it succeed (Incredibly enough, this ruling comes from a decision rendered by a Federal court in Missouri! (U.S. v. Baumgarten, 1975) ). You must have, in short, an interest in the criminal venture. So, does carrying advertisements for Internet gambling rise to that level of participation?
Not hardly.
A radio station, web page, newspaper, etc., which carries the advertising has no interest in whether the online gambling operation ever takes a single bet. All that matters is that they get paid, and that they run the ad for the contracted time. Whether the online casino takes in a million dollars or nothing at all doesnt matter in this context. Therefore it is highly questionable whether any specific intent to facilitate gambling could be formed in these circumstances. Moreover, there is no way to tell whether any gambling ever took place, even when online gambling site is accessed- many of these sites, after all, have free play options. The only way to find out for sure, is to check the online casinos records. That is not likely. But even if it were granted, we would still be looking after the fact- after the bet has been placed. So an advertisers participation would be highly questionable: there is no such thing is aiding and betting an offense that has already taken place.
IGNORING THE SUPREME COURT
Perhaps most surprising, is the arbitrary fashion in which the U.S. Department of Justices anti-advertising stance ignores the ruling of the U.S. Supreme Court. In the case of U.S. v Greater New Orleans Broadcasting (1999), the Rehnquist Supreme Court, surely no friends of gambling, struck down a Federal law which prohibited broadcast of casino advertisements between states. The old policy of forbidding such advertisement, said the Court, was no longer a coherent one where so many states were licensing so many forms of gambling. Therefore, the restraint on free speech outweighed any remaining benefit in such a law. And so it is now legal to transmit gambling advertisements interstate, provided that the gambling is legal in the place the advertisement originates.
And despite DOJs unsupported assertions to the contrary, Internet gambling is lawful in the places from which the advertisement originates. Therefore, the fact that this advertising is legal is very clear to everyone, apparently, except DOJ.
IGNORING INTERNATIONAL TREATY OBLIGATIONS
The United States is the most prominent member, not to say the moving spirit, behind the World Trade Organization. WTO's policy is to reduce and then eliminate barriers to the free flow of goods and services between nations. It acts through binding agreements between its 146 members.
The WTO s General Agreement on Trade in Services, also known as the Marrakesh Agreement, defines services as any non-governmental service in any sector, except where a specific nation has registered a specific exception. Such services include gambling, and advertising, and the USA has registered no such exception to the Agreement. Therefore, when America licenses and offers gambling services to its own population, and in fact the world at large (some of the horse betting services we discussed can take bets from all over the globe), while forbidding the participation of others in its home market, is a violation of that treaty. In fact, Antigua, at the time of this writing, is suing the USA before the WTO for exactly this reason. To try to punish advertising for services, therefore, is even more unjustified. It may or may not transpire that gambling is a protected service - but there can be little doubt that advertising always was.
CONCLUSION
In pursuing a blind and stubborn opposition to Internet gambling, the DOJ and the Bush administration pit themselves against the technological realities of the Internet, their international treaty obligations, and the changes to - even the precedents of - State and Federal law.
Harassing individual businesses will not change that. To the contrary, such performances call into question the usefulness and wisdom of the Patriot Act and related laws. The DOJ itself has already admitted that its new powers under that law are most often used against Americans whose loyalty was never in question, and against foreign terrorists hardly at all.
John Ashcroft and the strongarm squad from Missouri have performed a great service for the country, in a way they didn't intend. Their damn-the-facts, damn-the-law jihad against Internet gambling proves yet again that no government can be trusted with unlimited power, on any pretext. For once the current bad guys are disposed of.... whos next?
October 6, 2003
Feel free to send questions and comments on this article to Mr. Owens at his email address: mowens@trade-attorney.com.
Copyright 2003. All rights reserved.
