U.S. Threatens Action Against Online Gambling
Federal prosecutors have begun a wide-ranging effort to curb the growing popularity of online gambling in the United States by quietly threatening legal action against American companies that do business with Internet casinos and sports betting operations based outside the country, lawyers and industry executives say.
The investigation into the activities of media, public relations and technology companies relies on a controversial legal concept that holds that the American businesses, by providing advertising and other services that support Internet gambling, are "aiding and abetting" online casinos. That gives prosecutors an indirect way to attack the overseas enterprises, whose operations are illegal here but fall outside their jurisdiction.
Lawyers said they were not aware of any charges that had been filed. Still, the campaign, which has gone on for months, has already chalked up some significant non-legal victories. Several big media operations ? including Infinity Broadcasting, Clear Channel Communications and the Discovery Networks ? stopped running advertisements for offshore Internet casinos last fall in light of the threat of further scrutiny that might lead to prosecution.
The investigation comes as millions of Americans have turned to their home computers to place sports bets and play casino games. Using credit cards or other electronic payment methods, players can place wagers with the Internet casinos, most of them in Costa Rica, the Caribbean or the Isle of Man, between Ireland and Britain.
David Carruthers, chief executive of BetonSports.com, an online sports betting business based in Costa Rica, said he was licensed in Costa Rica, as well as in Antigua, the Dominican Republic and Britain. His company alone, he said, has 1.2 million registered American users and accepted 33 million bets from North America last year, the vast majority from the United States.
He said his advertisements had been banned recently from, among other places, the Howard Stern show, which is produced by Infinity Broadcasting, a unit of Viacom.
The investigation of the Internet gambling industry, lawyers said, is being run by Raymond W. Gruender, the United States attorney in the Eastern District of Missouri. His office convened a grand jury last year in St. Louis that has issued summonses to a number of companies and individuals, including Sebastian Sinclair, a market researcher who provides economic analyses of the online gambling industry.
Mr. Sinclair said he received a subpoena at the end of February. He said it required him to testify before the federal grand jury next month.
Federal prosecutors have begun a wide-ranging effort to curb the growing popularity of online gambling in the United States by quietly threatening legal action against American companies that do business with Internet casinos and sports betting operations based outside the country, lawyers and industry executives say.
The investigation into the activities of media, public relations and technology companies relies on a controversial legal concept that holds that the American businesses, by providing advertising and other services that support Internet gambling, are "aiding and abetting" online casinos. That gives prosecutors an indirect way to attack the overseas enterprises, whose operations are illegal here but fall outside their jurisdiction.
Lawyers said they were not aware of any charges that had been filed. Still, the campaign, which has gone on for months, has already chalked up some significant non-legal victories. Several big media operations ? including Infinity Broadcasting, Clear Channel Communications and the Discovery Networks ? stopped running advertisements for offshore Internet casinos last fall in light of the threat of further scrutiny that might lead to prosecution.
The investigation comes as millions of Americans have turned to their home computers to place sports bets and play casino games. Using credit cards or other electronic payment methods, players can place wagers with the Internet casinos, most of them in Costa Rica, the Caribbean or the Isle of Man, between Ireland and Britain.
David Carruthers, chief executive of BetonSports.com, an online sports betting business based in Costa Rica, said he was licensed in Costa Rica, as well as in Antigua, the Dominican Republic and Britain. His company alone, he said, has 1.2 million registered American users and accepted 33 million bets from North America last year, the vast majority from the United States.
He said his advertisements had been banned recently from, among other places, the Howard Stern show, which is produced by Infinity Broadcasting, a unit of Viacom.
The investigation of the Internet gambling industry, lawyers said, is being run by Raymond W. Gruender, the United States attorney in the Eastern District of Missouri. His office convened a grand jury last year in St. Louis that has issued summonses to a number of companies and individuals, including Sebastian Sinclair, a market researcher who provides economic analyses of the online gambling industry.
Mr. Sinclair said he received a subpoena at the end of February. He said it required him to testify before the federal grand jury next month.
