Adult Web sites stepping into the online gambling world may want to watch this one. A former stock trader is on trial for letting Americans bet on sports through his Antigua-based Web site, in a case MSNBC says could influence how other countries handle criminal conduct crossing their borders through cyberspace.
World Sports Exchange president and co-owner Jay Cohen is one of 21 owners and managers of nine offshore companies who were indicted in 1998, MSNBC says, on charges they used interstate telephones illegally to take online bets from American gamblers. Cohen is the only defendant to decide to fight the charges, while the others have pleaded guilty, been dropped from the case, or remain fugitives, MSNBC says.
Cohen faces a maximum five years behind bars and a $250,000 fine if he is convicted.
"Jay is a brave individual who believes if he gets a fair trial he will be exonerated of all charges," says his attorney, Benjamin Brafman, to MSNBC. "He believes what he is doing is legal, and does not want to be a fugitive from the United States for the rest of his life."
There's more than federal law applying to online betting at stake in the trial, however, MSNBC continues. "This is an interesting case of asserting jurisdiction over overseas Web sites in a criminal context," says Washington Internet law expert Jim Halpert, to the Financial Times of London. "It will be closely followed by companies doing business on the Internet, both in the U.S. and abroad."
The Internet gambling business is comparatively young but growing fast, MSNBC says, with some 650 Web sites now taking bets on sports as well as offering casino-style gambling. MSNBC says these sites could mean about $1.5 billion in revenues this year alone and hitting over $3 billion by 2002.
And even if Cohen wins his case, MSNBC says, that might only give momentum to anti-Net gambling foes such as U.S. Senator Jon Kyl - the Arizona Republican is trying to push a ban on Net gambling through Congress.
Brafman plans a defense around the point that sports betting is not only legal in New York but so is receiving a sports bet in Antigua. Jury selection started Feb. 14, and MSNBC says the trial could take two weeks. Brafman also plans to argue the law under which Cohen was indicted was written to stop bookies from handling telephone bets and couldn't apply to the Internet, which didn't exist at the time.
He cites Kyl's bill as proof. "If the Kyl bill is necessary to prohibit Internet gambling, as the bill's proponents argue, it follows that World Sports Exchange is not currently doing anything wrong," he tells the Financial Times. But U.S. District Judge Thomas Griesa, presiding over the trial, has turned down a move to throw the case out which relied largely on that very argument, MSNBC says.
