article related to internet gaming companies and u.s. law

[Eihli]

http://www.securityfocus.org/columnists/229

[ QUOTE ]
As a computer security expert, you are hired by an offshore casino in the Cayman Islands to develop a security and authentication technology. Your client is a licensed Cayman casino that has been operating for over 30 years, and wants to make a foray into online gaming.

You perform a standard penetration test, a security assessment, an architecture and code review, help establish the SSL and authentication protocols, and help with firewall implementation and monitoring -- you know: the full suite of security services. You test the beta site and its configuration, and give your stamp of approval.

With check in hand, you return to America and days, weeks or months later, the site goes active. A few weeks after that, you are visited by an FBI agent with a federal grand jury subpoena seeking records relating to your security work. Weeks after that, a knock on the door announces the arrival of deputy U.S. Marshals with a warrant for your arrest for violation of 18 U.S.C. 1084 and 18 U.S.C. 2.

[/ QUOTE ]

[Wake up CALL]

For those that are interested 18 U.S.C. 2 reads as follows:


(a)

Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.

(b)

Whoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal

[slavic]

This one is a bit of a far reach. Currently "Casinos" aren't listed for US export compliance, and most of the "technology" wouldn't be an export issue either. So we are down to that your "client" may break a US law even though they are legally running in their own local. If that standard is held then foreign trade may become like tappdancing on a land mine.

Let's say your in ship repair, a Japanese vessel breaks down in international waters, you fly to the scene and repair the ship. Once paid for your services you leave. Now said ship drifts into US waters and Harpoons a sperm whale. (Just for the sake of argument none of the Harpooners are American Indians who could possibly be allowed to Harpoon random whales).

Would you now be liable for the actions of the said vessel?

[M.B.E.]

[ QUOTE ]
Let's say your in ship repair, a Japanese vessel breaks down in international waters, you fly to the scene and repair the ship. Once paid for your services you leave. Now said ship drifts into US waters and Harpoons a sperm whale. (Just for the sake of argument none of the Harpooners are American Indians who could possibly be allowed to Harpoon random whales).

Would you now be liable for the actions of the said vessel?

[/ QUOTE ]
That's not a good analogy. To make it better, add two factors: (a) you aren't just doing general ship repair, you've been specifically retained to service the harpooning equipment; and (b) before you begin working, you are aware that the captain of the ship intends to harpoon whales in American waters after you're through.

Now, I don't know whether an American court would convict you of the crime of aiding and abetting an illegal harpooning under these circumstances. But in my opinion, such a conviction would be perfectly reasonable.

The article by Mark Rasch at securityfocus.org is quite good. Thanks for providing the link, Eihli.

[drewjustdrew]

So there isn't an issue here right, since the US has not declared online gaming illegal. What laws do the states have regarding this?

[Eihli]

But I think the US has declared placing bets over wire from across a state border is illegal, which would make online gaming illegal.

[J.R.]

The 5th circuit discrict court's opinion interpets the wire act to only prohibit sports betting.

In dismissing a civil RICO class action that claimed Internet gaming is an illegal racketeering enterprise, a federal district court in Louisiana recently concluded that the plaintiffs failed to allege a Wire Act violation (RICO requires the collection of an illegal debt- and court said no sports betting, so no illegal bet under wire act, so no illegal debt that was collected) because the plaintiffs (losing gamblers who didn't want to pay MasterCard for gambling charges to their credit cards) never claimed to have placed bets on sporting events. In re Mastercard Int’l Inc., Internet Gambling Litigation, 132 F.Supp.2d 468, 480-81 (E.D.La. 2001). The 5th Circuit Court of Appeals affirmed, limiting, the so-called `Wire Act,' 18 U.S.C. 1084, to sports betting and adopting the District Court's analysis. In re MasterCard Int'1 Inc., Internet Gambling Litigation, 313 F. 3d 257, 262-263 (5th Cir. 2002),


However, offshore operator's have been prosecuted for violating the wire act, although I believe this case invoved sports betting. In U.S. v. Cohen, No. 98 CR 434 (S.D. N.Y. 1998). the co-owner and operator of an off shore gambling business, licensed and located in Antigua, was indicted for alleged violations of the Wire Act arising from accepting bets from the United States over the Internet and telephone. The defendant argued his actions were not illegal because section 1084(b) of the Wire Act exempted transmission of betting information between a state and a foreign country where betting was legal. He further argued that he did not violate the statute because betting was legal in both New York and Antigua. However, his defenses were rejected, and a federal jury in New York convicted him of violating the Wire Act.

[M.B.E.]

Apparently, a panel of the World Trade Organisation recently ruled that U.S. action against Antigua's online gaming industry is contrary to international law:

http://news.bbc.co.uk/1/hi/business/3568281.stm

http://seattlepi.nwsource.com/business/166397_gambing26.html

http://news.google.com/news?q=antigua+gaming%7Cgambling%7Conline

[Wake up CALL]

[ QUOTE ]
But I think the US has declared placing bets over wire from across a state border is illegal, which would make online gaming illegal.

[/ QUOTE ]

Incorrect unless they are bets on a "sporting event or contest", as quoted from the Wire Act of 1974.