Net gambling craps out in New York
July 29, 1999
by James Ledbetter and Steve Viuker
NEW YORK (IDG) -- A New York state judge delivered what may be a damaging blow to the online gambling industry yesterday, when he ruled that New York's gambling ban applies even to Web sites based overseas.
In an action brought by the New York State Attorney General's office against World Interactive Gaming Corporation, Judge Charles Edward Ramos insisted that a Web site providing New Yorkers with a virtual gambling experience violates state law, regardless of where the Web servers are actually situated.
"It is irrelevant that Internet gambling is legal in Antigua," wrote State Supreme Court Justice Ramos. "The act of entering the bet and transmitting the information from New York via the Internet is adequate to constitute gambling activity within New York State."
Anthony Colleluori, an attorney for WIGC, vowed to appeal the decision. "This is just the beginning, and we're not upset by this ruling, although we disagree with it," Colleluori said. He cited a federal ruling that says an Internet transaction takes place in the country where a server is located, and predicted that such reasoning would prevail. He added that his clients "are ready to do business, as soon as the government stops persecuting us."
Many observers were quick to call it a landmark case. In a statement issued Monday, New York Attorney General Eliot Spitzer trumpeted the ruling as "an important decision for law enforcement throughout New York and perhaps throughout the nation."
Scott Brown, a spokesman for Spitzer, declined to say whether the attorney general's office was pursuing legal actions against other Internet gambling sites.
While Ramos' decision is not legally binding outside of New York, online-gambling experts say it may well encourage other state attorneys general to file suit against any of the 300 or so Internet gambling sites. Sebastian Sinclair, gaming analyst for Christian Cummings Associates, said the ruling indicates that "it is up to the states to determine what is legal." He added that federal legislation to ban online gambling "might be irrelevant at this point."
But some observers say that Internet gambling is too powerful an application to be stopped by this ruling. Sue Schneider, publisher of Interactive Gaming News, said that while the case shows who has jurisdiction in the United States, it "will not slow down a burgeoning international industry where the individuals are not United States citizens."
The case against WIGC is hardly typical. The company, which at one time operated the Golden Chips online casino, was primarily under investigation for allegedly defrauding investors. The state never actually indicted WIGC executives for running a Net gambling operation. Rather, the action grew out of a contempt of court proceeding stemming from the company's failure to cooperate with investigations into its finances.
Although the Golden Chips casino site does not appear to have operated for months, the domain is registered to a generic address on the island of Antigua. Calls to the domain's ostensible administrator were not returned.
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