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WO: With recent actions against Jessica Davis and Bill Scott of WWTS (World Wide Telesports) and the Carruthers situation, is the U.S. government saying that they are serious about imposing our rule on the online gaming industry?

LGW: I think the U.S. government has always been serious about enforcing online gambling laws against sports betting operations. I don’t think that you can extrapolate anything further into other forms of online gambling such as poker since the law is at best unclear and more likely does not apply to any other form of online gambling despite the Justice Department’s pronouncements to the contrary.

Obviously the [U.S.] government has opened up a new front when it comes to pursuing foreign companies and citizens for online gambling violations. I think it’s unprecedented for the U.S. to pursue a foreign individual like Mr. Carruthers for an online gambling violation and so that certainly sent out shockwaves through the industry given this new kind of tact that the Justice Department is taking with regards to foreigners, but as far as opening up a wider front and concluding that the government is now willing to take on the internet gambling industry as a whole, I don’t think that’s what this case means.

The Justice Department spokesperson would like to have you believe that and they always like to get as much bang for the buck as possible when they initiate an expensive prosecution, like a racketeering case. These cases are quite costly to pursue, so I’m sure the Justice Department would like to get as much impact out of the arrests as possible and scare off as many people in the industry as they can. But as far as the realistic meaning of the case—all this is, is one prosecution against one company that they’ve been following for quite some time. The timing of this case I don’t think is particularly significant in that they’ve been investigating BetonSports for years. The nature of the allegations in the indictment are that this was a U.S. sports betting operation started in New York then moved to Florida and was ultimately re-organized offshore. It’s not surprising that the government would claim that this is an illegal operation.

They’ve pursued other similar businesses in the past, successfully. The Wire Act does clearly apply to sports betting. It is what it is, this kind of thing has been pursued in the past, and I don’t think you can read too much into it.

WO: Is there any actual legal basis for the detention of David Carruthers?

LGW: There is a U.S. law basis for pursuing foreign individuals whose criminal activity has an effect or an impact on the United States. This is an exceedingly complicated area of the law. The cases are not particularly well analyzed they can go either way really but there have been a number of cases involving, for example, drug trafficking, or terrorism, or money laundering, where foreign individuals have been prosecuted by the United States. They’ve been extradited or they’ve been seized while they’re here in the U.S. and they’ve been successfully pursued for criminal activity that somehow impacted the United States. It’s not wholly unprecedented, but it’s the first time this has been done in the online gambling industry so it took the industry a bit by surprise and it is something that the courts are going to have to grapple with because there are no established rules when it comes to the online gambling industry and whether foreigners can be prosecuted. The legal principles at stake take into consideration a number of factors, like the relationship between the countries, issues of what’s called comity, international treaties and political impacts and ramifications so this is not going to be a simple matter, to grab a foreign citizen for alleged non-compliance with U.S. laws.

There will be some significant defenses that will be asserted and there will be potentially some new law made by the case.

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