Aiding and betting: online gambling crackdown

Reason, August-Sept, 2004 by Jacob Sullum

IF YOU LIKE to gamble, you might want to go to 888.com, where you can play blackjack, poker, craps, slots, and roulette. If you prefer sports betting, try betonsports.com.

According to the U.S. Justice Department, publishing the previous paragraph may be 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 year, 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, convened a grand jury in St. Louis that started 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. In April, Google and Yahoo!, two of the most widely used Web search engines, also caved. Although Googie was vague about its motivation, Yahoo! said "a lack of" clarity in the environment" made gambling ads "too risky."

The Justice Department maintains that online gambling is illegal under the 1961 Wire Act, even when the casino or betting parlor is located overseas. But since it's hard to prosecute gambling operations based in other countries (and since placing a bet is not necessarily illegal, depending upon the state where the gambler lives), the government is threatening middlemen instead. Given how broadly the Justice Department 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.

But middlemen can be offshored too. A few weeks after Google and Yahoo! said they would stop accepting gambling ads, the U.K.-based AskWinner.com, a casino information site, announced that it was stepping into the breach with "a new pay-per-visitor advertising solution."