Web gambling case could be far-reaching

Can a law passed when computers took up entire rooms keep an Antigua-based Web site from accepting bets from U.S. citizens? Jay Cohen says no.

Can a law passed when computers took up entire rooms keep an Antigua-based Web site from accepting bets from U.S. citizens? Jay Cohen says no.

In March, the U.S. government charged Cohen and 20 other Internet gambling site operators with violating the 1961 Wire Communications Act, which made placing or taking bets over phone lines illegal.

Cohen is the first to contest the charges, in a trial that started Feb. 14 in New York. The other 20 defendants, all U.S. citizens operating outside the country, have since pleaded guilty or remain fugitives -- including Steve Schillinger and Haden Ware, Cohen's partners in the site (www.wsex.com). A conviction carries a maximum sentence of five years and a fine up to $250,000.

''Jay strongly believes that he did not commit a crime, that he ran this company in a completely legitimate manner,'' says Benjamin Brafman, Cohen's lawyer. ''He feels confident that, if given an opportunity to have his day in court, that a jury will find him not guilty.''

The fact that Internet gambling is legal in Antigua is a major part of Cohen's defense, which Brafman expects to begin presenting after the prosecution rests today.

''As far as we're concerned, all bets are placed here on our server here in Antigua, which is a sovereign state and we're fully licensed,'' said Simon Noble of www.intertops.com, another Antigua-based gambling site.

But the U.S. government doesn't draw a distinction between making a bet on the Internet and calling a bookie, and the law might be on their side.

''It may not make a difference whether the server was located in Antigua, because the federal anti-gambling law in question applies broadly,'' said Jim Halpert, a Washington, D.C., lawyer familiar with Internet law. ''Typically, the fact that a site is doing business with consumers in a jurisdiction is sufficient to establish jurisdiction in the state where the consumer is located.''

The trial is expected to go to the jury later this week. The assistant U.S. attorneys prosecuting the case weren't available for comment, but U.S. Attorney General Janet Reno has been quoted as saying a conviction would help establish that the Web is not an ''electronic sanctuary'' from U.S. laws.

The decision will raise other questions. For example, can a foreign-based site sell a non-FDA-approved drug to a U.S. customer?

''This case is an important test of whether U.S. criminal laws apply to Web sites outside the United States, and it will establish a precedent that will be watched closely outside the gambling arena,'' Halpert said.

Still, a conviction probably won't squelch the estimated 800-plus sites currently taking bets.

''We are operating on a global basis in a global market, so what happens in . . . New York is unlikely to impact on a customer placing a wager in Malaysia,'' Noble said.

Sign-up for the OSGA Newsletter!

Every week get news and updates, exclusive offers and betting tips delivered right to you email inbox.