ONLINE GAMBLING SITES CONTINUE TO ADVERTISE IN SPITE OF CRACKDOWN

15 October 2006

NEWSDAY.COM
By DAVID B. CARUSO
Associated Press Writer
October 14, 2006, 5:20 PM EDT

NEW YORK — Despite repeated warnings from law enforcement officials, offshore Internet gambling companies have continued to advertise heavily in the United States.

Giant billboards in Manhattan, some several stories high, brazenly advertise Internet gambling sites like Sportsbook.com, now based in Antigua.

Promotions for BetUS, a Canadian and Costa Rican company that takes wagers on American sports, run regularly on the Howard Stern Show on Sirius Satellite Radio. Fantasy football magazines on sale at newsstands are packed with ads for online bookies and casinos.

The advertisements _ which the companies insist are legal _ have helped attract millions of customers to online gambling, and may have left the impression that both the ads and online wagering are legal.

They are not, said Paul Larrabee, a spokesman for New York Attorney General Eliot Spitzer.

“Gaming and bookmaking are not legal in New York, so anyone who markets to a New Yorker may be in violation of New York state law,” Larrabee said. “We have done case after case after case involving instances where an act that is illegal in New York is marketed to New Yorkers.”

Actual prosecutions of advertisers for promoting gambling are rare, however, and media companies accepting the ads insist they are breaking no law.
That position sometimes hangs on a looser interpretation of gambling laws.

ESPN, for example, runs ads for online poker sites during its broadcasts of the Word Series of Poker, but says it does so only for Web pages that don’t actually process bets.

“We only accept advertising for educational, learn-to-play, for-free sites,” said ESPN spokeswoman Keri Potts.

Many of these so-called “educational” sites, however, are simply companion pages to full-fledged gambling operations, easily reachable with a few mouse clicks or by changing the last few characters of a Web address from “.net” to “.com.”

Potts said it wasn’t up to ESPN to investigate those affiliations.

“Is it really for us to be regulating how they operate their businesses?” she said.

The Justice Department has taken a different view. In 2003 it warned that publishers and broadcasters who advertise gambling sites could be prosecuted for aiding and abetting a crime.

A year later, federal authorities pressured the parent company of the Discovery Channel into forfeiting $6 million in advertising money that had come from online poker sites.

A similar arrangement was reached in January with the Sporting News, which agreed to pay a $4.2 million fine and run $3 million worth of public service announcements to resolve claims that it ran ads promoting illegal Internet gambling.

Despite those settlements, Internet gambling lawyer Lawrence G. Walters said there is uncertainty over whether running advertisements for an offshore gambling concern is illegal.

“They scare these people to death and tell them they are going to prosecute them criminally if they don’t cooperate … but I’m looking forward to the day that someone decides to fight this,” he said.

The situation was muddied further on Friday when President Bush signed legislation aimed at prohibiting the credit card and electronic fund transactions U.S. players often use to settle online wagers.

Some foreign online gambling outfits said immediately after the legislation was signed that they would stop doing business with American customers.

“The real question is, ‘Are any of the online gambling Web sites going to bother advertising anymore?” given the change in U.S. law, Walters said.

Sportingbet PLC, a British Internet gambling company that had hung billboards throughout Manhattan bearing the image of actress Nikki Cox and the slogan “Everybody Bets,” sold its site Sportsbook.com to a company in Antigua on Friday for $1.

The action came just weeks after the company’s chairman was arrested at a New York airport after customs officials discovered he was wanted on online gambling charges in Louisiana.

New York Gov. George Pataki ultimately decided that state law didn’t allow the executive to be extradited and he was allowed to fly home to London.

Spokesmen for several online gambling services declined to be interviewed about their advertising campaigns, but maintained that their offshore services are either legal or beyond the reach of U.S. law.

That argument was rejected by Christopher P. Blank, executive assistant district attorney for the Brooklyn DA’s rackets division.

“If you’re sitting in Costa Rica with your staff, and you’re accepting bets from New York, you’re gambling in New York,” he said.

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