Dear Reader,

Poof! Where'd the week go? Scroll down and find out.

Departingly yours,

Bryan

Advertising money taken by DoJ officials

The US Department of Justice expanded its attack on Internet gambling in April by confiscating $3.2 million in advertising cash paid to Discovery Communications by Tropical Paradise sportsbook for advertising slots, according to a report this week in the New York Times.

The newspaper reported that Federal law enforcement officials routinely seize money they suspect is connected to activities like money laundering, terrorism or drug smuggling and this has apparently been extended to cases involving internet gambling advertising.

The money initially belonged to Tropical Paradise, a Costa Rica-based Internet casino operation, which in October paid Discovery for television spots to advertise an online poker room, ParadisePoker.com.

According to court documents, the government seized the money and told Discovery, which is based in Silver Spring, Md., that it could be party to an illegal activity by broadcasting such advertisements.

Federal prosecutors contend that Got2bet sites are illegal, but the offshore casinos fall outside their jurisdiction. So for nearly a year, the government has been trying to curb the sites' activities by investigating and pressuring American companies that provide services to offshore gambling sites on the theory that they are "aiding and abetting" the operations.

Until now, the effort has largely involved seeking information from American companies, including major broadcasters, Web portals and industry consultants. The seizure of money significantly escalates the government's attack.

Matt Richtel, the author of the report says that the move has raised strong criticism from First Amendment experts, media industry executives and people involved with offshore casinos. They assert that the federal government is relying on an untested legal theory in taking action against American companies, and using tactics more typically used against organised crime activities.

"This is not drug money or terrorist money," said Rodney A. Smolla, dean of the University of Richmond School of Law. "The fact it is being treated as such shows a crusader's zeal against offshore gambling."

The possible message being sent, legal experts said, is that any American company that does business with an offshore casino - including software makers and consultants - could be in danger of having proceeds from that business seized.

"This is a strategy of intimidating anybody who is in the chain of commerce," said Lawrence Walters, a lawyer who works with offshore Internet casinos, as well as software companies that do business with the casinos.

The Justice Department declined to comment about this case or other investigations in this area.

Tens of millions of Americans place bets over the Internet, wagering on sporting events and on casino games like virtual blackjack, roulette and poker. But the casinos are outside the United States, typically in Costa Rica and the Caribbean or in Britain, where the operations are fully licensed and legal.

The legality of online betting is a complicated matter of some dispute in the United States. The government asserts that the federal Wire Act prohibits all Internet casinos, but the courts have been divided, legal scholars said.

The individual states also have laws that prohibit any gambling enterprises that they do not formally authorise. Some states, but not all of them, make it illegal for individuals to place a recreational bet; New York, for instance, does not make it illegal to place a bet online.

In June 2003, the Justice Department sent letters to trade groups representing major broadcasters and publishers, telling them their members could be violating the law by displaying advertisements on behalf of offshore casinos. The government said the businesses could be seen as aiding and abetting the activities of the casinos.

Then, Raymond W. Gruender, the United States attorney in the Eastern District of Missouri, convened a grand jury, sending subpoenas to companies asking them to provide a broad range of information about their relationships with offshore casinos. The investigation had a significant impact. Some major broadcasters, including Infinity Broadcasting and Clear Channel Communications, stopped taking gambling ads last fall. Google and Yahoo, the Internet search engines, said in April that they would stop taking such advertisements.

So far, executives at media companies have not voiced public challenges to the government campaign. An executive for one media company, who asked that his firm not be identified so as not to attract further attention from the Department of Justice, said that the government was promising to go easy on broadcasters and Internet sites that cooperate with its inquiry.

The executive said he had heard from people involved in the investigation that the government might begin levying fines or pressing charges against media companies.

News courtesy of Infopowa news service. More news here.