Courts Deal Internet Sports Gambling a Setback

[Jeff]

Courts Deal Internet Sports Gambling a Setback

From RGT....

NEW JERSEY – April 22, 2002 -- As reported by the Legal Intelligencer: “Although gambling on sports is perfectly legal in the United Kingdom and the Isle of Man, two of the companies they licensed to accept bets suffered a major setback in the U.S. courts last week in a decision that gives the government the power to seize funds from a New Jersey company that acted as their financial middleman for bets placed by Americans.

”The decision by the 3rd U.S. Circuit Court of Appeals in United States v. $734,578.82 in United States Currency is sure to have resounding effects because the foreign companies advertised to Americans on the Internet and insisted that their business was untouchable since all bets were `placed’ in England and the New Jersey company played no role in fixing odds, declaring winners or losers, or accepting or relaying bets or wagers.

”The 3rd Circuit disagreed and rejected the argument that the federal courts have no jurisdiction to apply U.S. gambling law to British companies operating legal gambling businesses on English soil.

”…[3rd Circuit Judge Theodore A. McKee] found that the government's only burden was to prove that the New Jersey company was violating New Jersey law by `promoting’ gambling.

”…McKee concluded that the foreign companies `are therefore actually arguing that the laws of England insulate them from forfeiture based upon their conduct in New Jersey. We reject that argument.’

”The two foreign companies -- Intercash Ltd. I.O.M. in Isle of Man and American Sports Ltd. in England -- argued that no U.S. law was violated since all the gambling transactions actually occurred in England where the bets were ultimately `accepted.’

”…As a result, they said, the activities of the New Jersey company, Intercash Financial Services-NJ, were not illegal since it merely acted as a conduit for funds.

”…Although the caption of the lawsuit suggests that the government seized more than $730,000, prosecutors later amended the suit to reflect that they had seized only $489,578 since some of the funds had been withdrawn after agents served the warrant, but before the bank tendered the proceeds to the government…”

[Latin King]

wouldn't they be tipping their hat here as to which way they will decide in the cohen case? i think a precedent is being set here. it doesn't look good.

[ShiftySheik]

Are Neteller & Paypal next? What's stopping NJ from seizing their bank accounts?

[HotPants]

I read this somewhere last night and agree--the powers that be are setting precedents and making it clear that they do not want this business. They may not be able to stop the internet gambling by making it illegal, but if they can make it risky, difficult and inconvenient for customers to get their money to the sportsbooks, they can significantly decrease the level of activity.

MasterCard and Visa are already telling 3rd party processors like PayPal and Neteller to knock off the use of their services for gambling.

Of course this is a double edged sword. This just forces those determined to make a business out of this underground further and to find new and craftier ways of marketing their businesses.

Why is no one going after porn paysites more?????? How about those selling illegal prescription drugs freely???

[Jeff]

Courts OKs Seizure Of Net Gambling Cash Destined For U.K.


By Steven Bonisteel, Newsbytes
PHILADELPHIA, PENNSYLVANIA, U.S.A.,
24 Apr 2002, 4:58 PM CST



A federal appeals court has upheld what the U.S. government says is its right to seize revenue that was on its way to an online gambling outfit in the U.K. where the betting was entirely legal.
In a decision filed last week, a three-judge panel of the 3rd Circuit's Court of Appeals said U.S. gambling laws could be used to wrest more than $1.3 million from an operation based on the Isle of Man because bets by American gamblers touched down at a New Jersey company that served as a relay for funds transfers by wire.


The decision backed up the opinion of a U.S. District Court in New Jersey almost two years ago in a case known as "United States v. $734,578.82 in United States Currency."

The case's longer name - "United States v. $734,578.82 in United States Currency (and) $589,578.82 in United States Currency" - provides a better picture of the amount of money the federal government began seizing from U.S. accounts of the U.K.-based Intercash Ltd. and its U.S. and Canada-based affiliates in 1998.

Recounting the evidence from the District Court case that began in January of 1999, the appeals court said the Isle of Man's Intercash and an operation called American Sports Ltd. (ASL) - and related companies such as American Sports Betting Service - were owned by Gary Bowman, and comprised a legal gambling business in the U.K.

However, the District Court heard that the majority of gamblers using the services of Bowman's companies were in the U.S. and Canada, with much of the take being processed by a New Jersey company incorporated in 1995 under the name Intercash Financial Services (IFS).

The court found that information published by Bowman's companies on the Internet instructed U.S. residents how to wire funds to top up their betting accounts - money that New Jersey-based IFS would then transfer into accounts belonging to American Sports Ltd. or to a Canadian equivalent of the New Jersey outfit.

"IFS (New Jersey) deposited thousands of dollars each day into those accounts," the appeals court noted. "These deposits represented wagers from numerous bettors across the United States. For example, on Dec. 9, 1996, (local manager) Dennis Pokoyoway made deposits ranging from $2,000 to $ 15,000 for IFS Canada. In addition, Western Union corporate security officers informed Federal Bureau of Investigation agents in October of 1996 that IFS (New Jersey) had been sending Gary Bowman as much as $ 90,000 per day."

In 1998, after discovering the U.S. citizens were gambling through ASL, law enforcement officials arrested Pokoyoway, who pleaded guilty to charges of promoting gambling and outlined IFS's financial transactions since 1995.

Federal authorities began seizing money in the Bowman-related accounts at the time of Pokoyoway's arrest, but Bowman's companies later filed claims for the cash, saying the U.S. government had no right to grab the U.S. businesses' assets.

The District Court disagreed, and so too did the appeals court last month, saying there was little doubt that the alleged illegal activity occurred in New Jersey, giving authorities probable-cause grounds to seize the funds in the first place.

"IFS (New Jersey) was a integral component of Bowman's gambling enterprise," the court said. "It received funds from bettors throughout the United States and processed those transfers so that the bettors could open accounts and place bets with ASL and other Bowman companies. It sent Bowman an hourly accounting of these funds. This allowed Bowman to monitor betting income and it also allowed bettors to call ASL and Bowman to confirm their deposits and place bets."

On the issue of Bowman's businesses being legal outside the U.S., the court wrote: "(Bowman's) essential claim is that the district court had no jurisdiction to apply United States gambling law to a British citizen and British companies operating legal gambling businesses on English soil."

However, the court said, U.S. gambling laws "reflect the 'strong public policies' of the United States government, and the government is not required to tolerate activity that it defines as illegal merely because it affects someone who may live in a country where the activity is legal."

[Blowfish]

Well the upcoming football season should prove interesting.

[Dragon]

This is a banking error on Bowmans behalf that cost them a small bundle. The never should have assumed that they could run that money through the states without a problem. There are so many alternatives. Not good though. This industry doesn't need any press, period.