Online Gambling Crackdown Long Overdue

This week, a long-overdue precedent was set when the operator of a sports gambling Web site was convicted in the first case of its kind to go to trial.

The New York jury found that Jay Cohen, 33, had broken the U.S. Interstate Wire Act of 1961 by accepting bets and wagers on sports events via the Internet and telephone.

Cohen, the president of World Sports Exchange in Antigua, was among 22 defendants charged in March 1998. In a statement, U.S. Attorney Mary Jo White said the San Francisco, California man was the first individual to stand trial in the United States for running such an offshore operation.

Cohen was the only one of the defendants to return to the U.S. to face the charges, arguing that he operates a perfectly legal and regulated gambling site in Antigua. The jury disagreed, and found him guilty for accepting a bet from a resident of New York — a state where gambling is illegal.

Benjamin Brafman, Cohen’s attorney, claimed that the jury was biased by the judge’s explanation of the Interstate Wire Act.

“I believe that the legal instructions provided by the court gave the jury no choice but to find Mr. Cohen guilty,” Brafman said. “I do not believe that this verdict will survive appellate review and we have every intention of pursuing a vigorous appeal for Mr. Cohen.”

Faces a 19-Year Sentence

Cohen faces a maximum prison term of five years on one count of conspiracy to violate the Wire Wager Act and two years on each of seven other related charges. Sentencing will take place on May 23rd before U.S. District Judge Thomas Griesa.

Prosecutors alleged that people like Cohen have tried to skirt U.S. law by running their operations from jurisdictions that allow gambling, including Curacao, Panama, the Dominican Republic, Antigua and Costa Rica.

By convicting Cohen, it appears to me that the U.S. government is finally letting all would-be lawbreakers know that the Internet is not a shield from prosecution.

Just a Slap on the Wrist

In the past, similar transgressors received little more than a slap on the wrist.

This past January, YouBet.com, an online gambling site based in Los Angeles, reportedly agreed to pay $1.3 million (US$) to California authorities to settle an investigation into the company’s online horse racing operation in the state.

According to published reports, the company was ordered to pay a $600,000 civil fine, donate $500,000 to charitable causes and reimburse Los Angeles County for over $200,000 in costs associated with the inquiry.

Still, some Web activists believe that the techniques used by federal agents amount to nothing less than entrapment, and that the government is prosecuting such gambling sites simply because it wants to control the Internet.

Internet Needs Accountability

While I am not a fan of big government, I am also not a conspiracy theorist. The Internet will only be able to reach its full potential if those who see the online world as a free pass are held accountable.