Is Talking about Online Gambling Illegal?

Published May 24, 2004

Last June, Deputy Assistant Attorney General John G. Malcom sent a letter to media trade groups warning their members could be breaking the law by accepting ads for gambling sites. More recently, Raymond W. Gruender, the U.S. attorney for the Eastern District of Missouri, convened a grand jury in St. Louis that is issuing subpoenas to companies that do business with the online gambling industry.

This campaign of intimidation already has yielded results. In March, Google and Yahoo! stopped carrying ads for online gaming sites. Yahoo! said “a lack of clarity in the environment” makes gambling ads “too risky.”

These companies have surrendered their First Amendment rights without a fight, allowing the government to silence speech it doesn’t like by floating a legal theory that almost certainly would fail if it were tested in court.

“There is concern that gambling advertising may create the impression among the public that these activities are legal, when in fact they are not,” Justice Department spokesman Michael Kulstad told Media Daily News. “It’s an ‘aiding and abetting’ kind of thing.”

The law is not nearly as clear as Kulstad implies. The Justice Department maintains online gambling is banned by the 1961 Wire Act. But gambling sites are based in countries where online wagering is perfectly legal. It’s debatable whether a bet placed by an American via the Internet takes place on his computer, at the casino in, say, Costa Rica, or somewhere in between.

As much as the Justice Department might like to assert jurisdiction all over the world, such interference understandably raises hackles abroad. In March, the World Trade Organization, in response to a complaint from the Caribbean nation of Antigua and Barbuda, ruled the U.S. is violating its free trade commitments by trying to block cross-border betting. The WTO’s arbitration panel apparently was convinced by Antigua and Barbuda’s argument that the ban on Internet wagering is a trade barrier aimed at protecting the American gambling industry.

In practice, of course, it’s difficult to prosecute casino operators based in other countries, which is why the Justice Department is instead going after Americans who sell them services. Given how broadly the government seems to be interpreting “aiding and abetting,” it could bring charges against not just carriers of advertising, but marketing consultants, banks, Internet service providers, telecommunications companies, computer professionals, and anyone else who facilitates online betting.

Under the Justice Department’s effort, online gambling operations and their customers (who, depending upon the law in their state, may not be committing a crime by placing a bet) may escape punishment, while the people who help bring them together are left holding the bag. Such a result might strike jurors as unfair. But given the way its crackdown has worked so far, the Justice Department probably won’t have to worry about that.

Jacob Sullum ([email protected]) is a senior editor at Reason.