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Advertising Liability in the Online Gambling Industry
By: Lawrence G. Walters
Signs of a crack down on gambling advertising by United States authorities began to emerge in October, 2003, as word of an investigation into gaming portals and advertisers leaked out. Raymond W. Gruender, Assistant U.S. Attorney General for the Eastern District of Missouri, launched the investigation by issuing numerous subpoenas to media outlets in the wake of his earlier letter to the National Association of Broadcasters, and others, warning that the practice of accepting gambling advertising may constitute aiding and abetting illegal conduct under federal law.[1] The letter further warned that “state and federal laws prohibit the operation of sportsbooks and Internet gambling within the United States, whether or not such operations are based offshore.”[2] Interestingly, the correspondence noted that the volume of online gambling advertisements for offshore sportsbooks and online casinos is “troubling” because it misleads the public into concluding that such gambling activity is legal when, in the opinion of the Justice Department, it is not.[3] The letter cast itself in terms of a “public service announcement,” however it was clearly designed to intimidate advertising venues into ceasing all further online gambling advertising.
Advertising, Aiding & Abetting
Although no federal law specifically prohibits online gambling advertising, the government has hinted that it may pursue charges against those who accept such advertising under an “aiding and abetting” theory. The offense of “aiding and abetting” is defined under Title 18 U.S.C. § 2, which provides in pertinent part: “a) whoever commits an offense against the United States or aids, abets, counsels, commands, induces, or procures its commission, is punishable as a principal.” That offense occurs when a defendant willfully associates himself with the criminal venture and willfully participates in it as something he wished to bring about.[7] In order to be responsible for aiding and abetting, the accused individual must have had general awareness that his role was part of overall improper/illegal activity, and must have knowingly and substantially assisted violating a law.[8] Depending on the specific subsection of the federal aiding and abetting statute utilized by a prosecutor in a criminal case, the government would either be required to prove that another person committed a crime and that the defendant assisted in the commission of such offense[9] or that the defendant willfully caused another person to commit an act which would have been a crime had the defendant committed it himself.[10] In the later circumstance, the government need not prove that someone else committed any crime.[11]
The First Amendment & Commercial Speech
Considering the potential applicability of the aiding and abetting offense is only half the story. Irrespective of whether such offense can be made to apply to online gambling advertising, any defendant selected for prosecution under this theory would be certain to mount a First Amendment defense focusing on the right to disseminate commercial speech. In the United States, advertisers enjoy some degree of constitutional protection under the First Amendment since they are engaged in the publication of commercial speech.[17] In fact, the United States Supreme Court has held that the government cannot regulate speech about gambling to the same degree it can regulate gambling itself.[18] Moreover, advertisers may be allowed to advertise conduct that is illegal in the geographic location of the target audience, so long as that conduct is legal where it actually takes place.[19] All of this begs the question of whether, or more appropriately where, online gambling is legal? Such nuances will be difficult to discern since, from a technological standpoint, it is difficult to even conclusively determine where the gambling transactions actually take place. Does the “bet” occur at the moment the key stroke is made, or when it is received by the server, or when processed by the offshore gambling entity? This legal/technological quagmire has thus far dissuaded most federal prosecutors in the United States from taking on the Internet gambling industry through widespread prosecution. However, gambling advertisers are now apparently seen as an easier target.
The Industry Response
In order to preserve the ability to continue placing Internet gambling advertising with American media outlets, the online gambling industry, along with its various trade groups, must consider meeting the government’s threats head on with decisive action. Hopes that someone else will address this problem or the infamous “wait and see” approach are not viable options if advertising rights are to be preserved in the current political climate. A narrow window of opportunity may be available for the industry to mount a constitutional challenge in response to the threats and intimidation emanating from the Eastern District of Missouri. Title 28 U.S.C. 2201 & 2202 allow a litigant to seek a “declaratory judgment” as to the legality or constitutionality of a contract, statute, or governmental action. In order for one to mount such a challenge, the plaintiff(s) must have “standing” which is generally defined as a recognizable stake in the controversy. The threatened aiding and abetting charges may well provide that standing to allow an industry response in the form of a test case. Actual injury has occurred to various gambling sites, in that media outlets have pulled online gambling advertising in response to the government’s threats, resulting in substantial lost revenues.[20]