U.S. gambling and the law: Important milestones 2005 – 2008

 

2005

Esquire magazine

Despite the WTO ruling in Antigua vs USA, the U.S. Department of Justice subpoenas Esquire magazine for publishing online gambling adverts.

2006

William Scott

In Many, the U.S. authorities charges William Scott for operating an offshore sportsbook that accepts bets from U.S. gamblers. William Scott is already a fugitive from a separate case in 1998. He renounced his U.S. citizenship in 2004 and moved to the Netherland’s Antilles.

IntegrityCasinoGuide.com

In June, Washington state authorities shut down the web portal IntegrityCasinoGuide.com. The site owner did not face any penalties.

BetOnSports ceoDavid Carruthers and BetOnSports

In July, David Carruthers was arrested while changing planes in Texas, U.S. on his way from the United Kingdom to Costa Rica. He was the CEO of BetOnSports book. The site was based in the United Kingdom, but accepted bets from U.S. residents over U.S. phone lines.

In April 2009, Carruthers pleaded guilty to federal racketeering, and in 2010 he was sentenced to 33 months in prison.

HR 4411 – The Internet Gambling Prohibition and Enforcement Act

In July, the U.S. House of Representatives passes the HR 411 – The Internet Gambling Prohibition and Enforcement Act by a vote of 317 – 93. The act is sent on to the Senate for approval.

Peter Dicks and Sportingbet

In September, Peter Dicks, chairman of Sportingbet, is arrested in New York. Sportingbet is based in the United Kingdom, but accepts wagers from U.S. players online. This is not a federal arrest; he is arrested by the request of Louisiana authorities for violating the Louisiana state law against online gambling. Louisiana is one of few U.S. states where the law specifically banns online gambling. Article 14, Section 90.3 of the Louisiana State Code defines online gambling as “[…] the intentional conducting, or directly assisting in the conducting as a business of any game, contest, lottery, or contrivance whereby a person risks the loss of anything of value in order to realize a profit when accessing the Internet, World Wide Web, or any part thereof by way of any computer, computer system, computer network, computer software, or any server.

SAFE Port Act and the UIGEA

In October, republicans slip an anti-online gambling amendment into the Safe Ports bill. This rest of this bill doesn’t have anything to do with gambling (online or offline). When the Safe Ports bill is approved and enters into force as the SAFE Port Act, so does the amendment – The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA).

UIGEA “prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law”.

UIGEA expressly excludes fantasy sports that meet certain requirements, and legal intrastate and inter-tribal gaming. UIGEA doesn’t mention state lotteries, and does not clarify whether inter-state wagering on horse racing is legal.

2007

Neteller

In January, U.S. authorities arrest the founders of Neteller. Within days after the arrest, Neteller stops handling transactions for U.S. players. In February, Neteller customers have money kept in their Neteller accounts seized by the FBI as evidence. In March, Neteller reaches a deal with the FBI where the FBI agrees to return customer funds within 75 days. Neteller also stops handling transactions for Canadians.

Foreign investment banks

In January, the U.S. Department of Justice subpoenas four foreign investment banks which had underwritten online casinos.

Gary Kaplan and BetOnSports

In March, Gary Kaplan, founder of BetOnSports, is arrested in Puerto Rico.

In June 2009, Kaplans brother and sister plead guilty to two felony conspiracy charges. They are sentenced to 10 months of house arrest and are ordered to forfeit over $6 million.

In November 2009, Gary Kaplan is sentenced to four years in prison and is ordered to forfeit $44 million.

In December 2009, the company BetOnSports is fined £28.2 million.

Rep. Barney Frank

In April, Rep. Barney Frank files a bill that would diminish UIGEA:s impact on online gambling. In June 2008, Barney Frank and Ron Paul’s HR5767 bill to legalize and regulate internet gambling failed to make it out of the House of Financial Services Committee.

House of Representatives

In November, the U.S. attorney clarifies that it is not against U.S. federal law to make (not take) wagers online. This clarification occurs during a hearing about online gambling held by the House of Representatives.

Goggle, Yahoo and Microsoft

In December, Microsoft, Google and Yahoo each settle and agree to pay fines for displaying ads for online gambling. The U.S. authorities have not been able to show that Microsoft, Google or Yahoo have actually broken the law, but the companies agrees to settle anyway.

Kentucky

In September, a Kentucky judge allows the Kentucky state authorities to seize 141 gambling-related domain names. This is not a federal case; the sites were allegedly violating Kentucky state anti-gambling law.

The Kentucky Court of Appeals rapidly overturns the action.

Anurang Dikshit and Party Gaming

In December, Anurang Dikshit – co-founder of Party Gaming – pleads guilty to violating the 1961 Wire Act despite the fact that the 1961 Wire Act only covers sports betting online, not online casino or online poker. He is ordered to pay $300 million, and also risks up to two years in prison. Dikshit is never sent to prison though; in December 2010 he is sentenced to one year of probation.

In April 2009, the company Party Gaming agrees to pay $105 million to U.S. authorities to avoid prosecution.