Article - DOJ Defends Crackdown on Internet Gambling

[cokehead]

from law.com so I cannot link to it. Interesting how it says the Bush Admin wants to crackdown on internet gambling.

DOJ Defends Crackdown on Internet Gambling

Julie Kay
Miami Daily Business Review
11-05-2004


A Greenberg Traurig lawyer in Fort Lauderdale has sued the U.S. Department of Justice on First Amendment grounds to force the feds to back off their crackdown on Internet-based gambling.

Patrick O'Brien, a Greenberg partner, filed suit in U.S. District Court in Louisiana, alleging that the Justice Department's crackdown on Internet gambling advertising violates the free speech rights of his client, Massachusetts-based Casino City Inc.

The lawsuit, filed in August, is apparently the first brought against the federal government on the legality of online gambling, a multibillion-dollar global industry that is growing rapidly. Half the industry's customers are in the United States.

While the online casinos mainly are operated offshore, Internet portals and broadcast and print outlets in the United States run ads about the Web sites.

In its motion to dismiss filed last week, the Justice Department claimed that Casino City was not under threat of prosecution.

On the freedom of speech issue, government lawyers argued that "advertisements that concern unlawful activity" are not protected by the First Amendment.

"Internet and offshore sportsbook gambling operations are particularly pernicious because they can be accessed so easily by anyone in the country, including particularly vulnerable populations such as children and compulsive gamblers, via a computer or telephone, and also due to the potential for fraud and money laundering," the motion said.

The Justice Department started cracking down on the industry about a year ago. It sent a letter to the National Association of Broadcasters, the Magazine Publishers of America and several other media organizations warning that any media outlet or Internet portal accepting ads for the sites may be "aiding and abetting these illegal activities."

According to industry sources who didn't want to be named, the Bush administration launched the crackdown in a political appeal to religious conservatives.

The Justice Department characterized the letter to media groups as a "public service message," and asked the groups to forward the letter to all member organizations. But the message also included the strong warning that the Justice Department "reserves the right to prosecute violators of the law."

Federal grand juries subsequently subpoenaed records of a host of media outlets, Internet portals and public relations firms, including several of O'Brien's clients.

Casino City did not receive any subpoenas.

But O'Brien said Casino City president and chief executive Richard Corfman, "is at risk because people doing the same thing as him are being subpoenaed."

As a result of the federal actions, major broadcasters like Clear Channel Communications and Discovery Networks, as well as Internet portals Yahoo! and Google, stopped accepting ads for the online casinos last April.

Casino City Inc. operates CasinoCity.com, an online casino directory. It is actually based in Newton Centre, Mass., but maintains a Baton Rouge, La., address.

The laws regarding online gaming in Louisiana are more favorable to such businesses, O'Brien said.

O'Brien, who spent 25 years as a special agent with the U.S. Customs Service before joining Greenberg Traurig in 1993, has focused his law practice on international banking and Internet gambling. He represents several online gaming companies, none in Florida.

He was hired by Casino City along with Greenberg shareholder Barry Richard in Tallahassee, who serves as trial counsel in the lawsuit.

O'Brien said the company and case were carefully chosen for the lawsuit to set legal precedent on the issue.

"Mr. Corfman is committed to freedom of speech," O'Brien said in an interview.

O'Brien said he encouraged Corfman to file the suit in Louisiana because "case law on this issue is very good in Louisiana," O'Brien said.

He declined to explain what impact state law would have on a federal First Amendment case, other than to say he did not want less gambling-friendly Massachusetts state law to "cloud" the federal issues. "We want to make sure that state law has nothing to do with it," he said.

In the government's motion to dismiss, Assistant U.S. Attorney John Gaupp and Samuel Kaplan, a trial attorney in the Justice Department's civil division, argued that "with very few exceptions limited to licensed sportsbook operations in Nevada, state and federal laws prohibit the operation of sportsbook and Internet gambling within the United States, whether or not such operations are based offshore.

O'Brien and co-counsel Richard have not yet responded to the Justice Department's motion.