May 1998 from the MG Sports Web Site
The battle lines are drawn. On one side we have the U.S. government. On the other side, the offshore sports books
and the future of internet sports wagering. If the federal government has its way, there would be no sports bookmaking
operations anywhere but Nevada.
The government flexed its tentacles last Wednesday when it charged 14 people with illegally using telephone lines to handle internet wagers. The defendants are U.S. citizens who are allegedly involved in offshore operations in Curacao, Costa Rica, the Dominican Republic and Antigua.
"It's scare tactics," said Alan Weinrib, sports book manager for EasyBets, an Irish-based company that operates in the Dominican Republic. "Any of the bookmakers they have charged are trading quite legally."
EasyBets, which has about 2,000 customers, wasn't charged by the U.S. government. Nor were most of the offshore books, including such major ones as Bowman's in England and Intertops, an Austrian company with internet operations in Antigua.
"The whole thing is a matter of jurisdiction," a worldwide gaming analyst said. The analyst said he thought the U.S. government acted prematurely and the people charged are not guilty.
THAT'S CERTAINLY THE POSITION of Ben Brafman, a New York attorney whose firm specializes in white-collar crimes. Brafman is the lawyer for Jay Cohen, owner of World Sports Exchange in Antigua, whose company was charged along with Winner's Way, Galaxy Sports, Island Casino, Real Casino and SDB Global.
"For the government to proceed against these businesses now, when they have operated openly without legal difficulty for several years with the government being fully aware of their existence, is inappropriate use of government resources," Brafman said.
"In addition, I don't understand the distinction between what Mr. Cohen's business does and what the Las Vegas casinos do. They accept sports betting and advertise their hotels and sports betting facilities all over the country.
"What we're doing is avoiding travel to Antigua by using a telephone line."
UNTIL NOW, THE FEDERAL GOVERNMENT had not prosecuted on-line gambling companies. The move caught many by surprise since legislation sponsored by Sen. Jon Kyl (R-Ariz.) to prohibit intrastate and interstate online wagering is awaiting a floor vote after clearing the Senate Judiciary Committee.
This bill, called the Internet Gambling Prohibition Act, modifies a 1961 law that prohibits calling across interstate lines for gambling purposes. The government is charging these half-dozen sports books with violating this act.
Barry Lieberman, general counsel for Coast Resorts in Las Vegas, said U.S. citizens are subject to U.S. laws no matter where they reside.
Again, though, it comes down to jurisdiction, and these companies are regulated by their respective Caribbean, Central American and South American countries.
THESE COUNTRIES ALSO RESENT IT when the U.S. government tries to play bully.
"You don't see the U.S. telling Britain and Germany what to do," a U.S. gaming analyst said.
EasyBets, the Irish bookmaking firm, set up shop in the Dominican Republic because Ireland has a 10-percent betting tax.
"It's obviously not possible to go on the internet with a 10-percent betting tax," Weinrib said. "Therefore we have to go offshore for the purpose of competition."
Though the United States most likely won't go after his place, Weinrib is worried because about 80-90 percent of his customers are from America. That's in line with the percentage of Americans betting with other offshore books.
"This severely limits the individual's rights," Weinrib said. "What they're (the U.S. government is) doing is frightening people back to the illegal bookmaker."
MANY BELIEVE THE FEDERAL GOVERNMENT chose this time to discourage people from wagering because it's peak betting season in college basketball.
Although one of the places charged, SDB Global, apparently was refunding accounts and preparing to shut down, according to sources, it has been business as usual for other offshore books.
Cohen, for instance, was planning on going to New York on Tuesday to plead not guilty, according to Brafman.
"The reason why all these companies are operating offshore is because they've done the legal research," a part-owner of one of the companies charged said. "We spent, I couldn't even tell you how much, in attorney's fees to make sure what we are doing is clean.
"So there's nothing on the books that has any one concerned. What my concerns are is that the Kyl bill would make it a whole new ballgame."
WEINRIB HAS THE SAME ANXIETY. He's afraid the U.S. will impose restrictions on citizens from betting on the internet or by phone.
Lieberman, who worked for the Department of Justice in Washington D.C., before coming to Vegas, said the government isn't going after bettors.
"Wagering is not illegal," he said. "I can make an interstate bet as long as I'm not in the business of wagers. The interstate wire statute only prohibits those in the business (bookmakers) of wagering."
This was proven earlier this decade in the so-called Computer Group trial in Las Vegas when a highly sophisticated betting group was exonerated because they placed wagers instead of booked wagers.
"I don't think bettors need to be afraid if (foreign) government regulations are in place," Lieberman said. "The practical matter is what I would be concerned about, such as not knowing the regulations of a country the sports book is in."
The part-owner of one of the international books charged said he knows of only two offshore books since August who ran into problems paying customers. And, he said, those places weren't looking to steal; they just ran out of money.
"Where is the flood of evidence about companies ripping the consumers off?" he asked.
Tell it to Janet Reno.