Is talking about online gambling illegal?

Jacob Sullum
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Posted: Apr 09, 2004 12:00 AM

If you like to gamble, you might want to check out www.888.com, where you can play blackjack, poker, craps, slots and roulette. If you prefer sports betting, try www.betonsports.com.

 According to the U.S. Justice Department, I may have just committed a felony. Federal prosecutors say helping Americans find online casinos or sports betting operations could amount to "aiding and abetting" illegal gambling, a crime punishable by up to two years in prison.

 Last June, Deputy Assistant Attorney General John G. Malcolm sent a letter to media trade groups warning that their members could be breaking the law by accepting ads for gambling sites. Meanwhile, Raymond W. Gruender, the U.S. attorney for the Eastern District of Missouri, has convened a grand jury in St. Louis that is issuing subpoenas to companies that do business with the online gambling industry.

 This campaign of intimidation already has yielded results. Since last fall several media companies, including Infinity Broadcasting, Viacom Outdoor, Discovery Networks, and Clear Channel Communications, have stopped running ads for online casinos and betting services.

 This month Google and Yahoo!, two of the most widely used Web search engines, also caved. Although Google was vague about its motivation, Yahoo! said "a lack of clarity in the environment" makes gambling ads "too risky."

 These companies have surrendered their First Amendment rights without a fight, allowing the government to silence speech it doesn't like by floating a legal theory that almost certainly would fail if it were tested in court. Their capitulation illustrates the chilling effect of vague laws in the hands of ambitious prosecutors.

 "There is concern that gambling advertising may create the impression among the public that these activities are legal, when in fact they are not," Justice Department spokesman Michael Kulstad told Media Daily News. "It's an 'aiding and abetting' kind of thing."

 The law is not nearly as clear as Kulstad implies. The Justice Department maintains that online gambling is banned by the 1961 Wire Act, which prohibits anyone "engaged in the business of betting or wagering" from using "a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers."

 But gambling sites are based in countries where online wagering is perfectly legal. It's debatable whether a bet placed by an American via the Internet takes place on his computer, at the casino in, say, Costa Rica, or somewhere in between.

 As much as the U.S. Justice Department might like to assert jurisdiction all over the world, such interference understandably raises hackles abroad. Last month the World Trade Organization, in response to a complaint from the tiny Caribbean nation of Antigua and Barbuda, ruled that the U.S. is violating its free trade commitments by trying to block cross-border betting.

 The WTO's arbitration panel apparently was convinced by Antigua and Barbuda's argument that the ban on Internet wagering is a trade barrier aimed at protecting the American gambling industry. "The U.S. says it wants open competition," said Antigua and Barbuda's WTO representative, "but it only wants free trade when it suits the U.S."

 As if to confirm the double standard, U.S. Rep. Bob Goodlatte, R-Va., called the WTO ruling "appalling," saying, "It cannot be allowed to stand that another nation can impose its values on the U.S." What does Goodlatte think the U.S. is doing when it treats gambling operations that other countries consider legitimate businesses as criminal enterprises? By similar logic, American publishers could be prosecuted for posting material that a foreign government considered indecent or seditious.

 In practice, of course, it's hard to prosecute casino operators based in other countries, which is why the Justice Department is instead going after Americans who sell them services. Given how broadly the government seems to be interpreting "aiding and abetting," it could bring charges against not just ad carriers but marketing consultants, banks, Internet service providers, telecommunications companies, computer professionals, and anyone else who facilitates online betting.

 The upshot could be that both online gambling operations and their customers (who, depending upon the law in their state, may not be committing a crime by placing a bet) escape punishment, while the people who help bring them together are left holding the bag. Such a result might strike jurors as unfair. But given the way its crackdown has worked so far, the Justice Department probably won't have to worry about that.