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U.S. Noose Against Online Gambling Tightens

By: R. Kingsley, Thursday September 4th 2008
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Two recent court verdicts announced in the United States spell a grim future for online gambling. The country is already reeling under the onslaught of the UIGEA.

The most recent judgment, passed this week, concerns the law against the advertisement of online gaming and the sports book web site BetOnSports. The case has been in process for two years. William Hernan Lenis owns the direct mailing company "Direct Mail Expertise". William Luis Lenis and Manny Lenis are the other members of the family involved in the running of the company. Between the 2000 and 2006 Direct Mail Expertise distributed two millions BetOnSports advertisements. This was construed as advertisement of online gaming and a suit filed by the authorities in a St. Louis Court. All three defendants pleaded guilty to offenses of the interstate transportation of online gambling merchandise, the transmission of online gaming information, and misdemeanor counts. This was done despite their not being involved in any way with the operations of BetOnSports. The family's petition to change online gaming laws is pending in the courts, but is unlikely to result in a decision in their favor. In all probability the three members of the Lenis family will be charged in October and some of them could even face a term in jail. Both the online casino and the advertising fraternity have all along criticized the law against the advertisement of online gaming, especially as the U.K. now allows the advertisement of online gambling products and services.

The other judgment came in August and involved the popular online casino and poker room Bodog. Bodog was penalized for using payment processors within the United States, which has been outlawed under the UIGEA. This judgment too came after a two-year investigation. An amount of 24 million dollars was seized from various payment processors of Bodog. The agent handling the investigation claimed in an affidavit that Bodog had been remitting funds to payment processors in the United States so that payouts could be made to its customers. The payment processors that were named in the investigation include EGALO, dba ZipPayments.com, Direct Channel LLC and ZAFTIG Instantly Processed Payments Crop. In Hollywood style the agent operated undercover as a client of Bodog wagering more than $3500 during the two-year investigation period. Chief Executive Officer of Mohawk Gaming Group that owns the Bodog brand, Alwyn Morris, tried to downplay the penalty. He stated that outsourcing payment processing to third parties is an integral part of the online casino industry. He added that the present legal environment for online casino gambling in the U.S. is so uncertain and that this uncertainty has been responsible for Bodog being heavily reprimanded.

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