Online Gambling Offences Prosecutions
🔍 Overview: Online Gambling Offenses in U.S. Law
What is Illegal Online Gambling?
It typically refers to offering or engaging in internet-based gambling services that violate federal or state laws. Even if operated offshore, businesses targeting U.S. customers may face federal prosecution.
🔧 Key Federal Statutes Used
Unlawful Internet Gambling Enforcement Act (UIGEA, 2006) — Prohibits processing of payments for illegal online bets.
Wire Act (18 U.S.C. § 1084) — Bars transmitting bets or gambling info across state or international lines.
Illegal Gambling Business Act (18 U.S.C. § 1955) — Prohibits large-scale illegal gambling operations.
RICO (18 U.S.C. § 1961–1968) — Racketeering law used against gambling enterprises.
Money Laundering statutes (18 U.S.C. §§ 1956, 1957) — Often used to prosecute financial concealment related to gambling proceeds.
⚖️ Key Case Law — Detailed Examples
1. United States v. Jay Cohen (2000)
Court: Southern District of New York
Facts:
Cohen operated World Sports Exchange (WSEX), an online sportsbook based in Antigua. Although legal there, he targeted U.S. bettors.
Charges:
Wire Act violations and conspiracy.
Outcome:
Convicted and sentenced to 21 months in prison.
Significance:
First major U.S. online gambling conviction — established that offshore gambling services can still be illegal under U.S. law if they serve American customers.
2. United States v. BetonSports PLC (2006)
Court: Eastern District of Missouri
Facts:
BetonSports operated a massive online sportsbook from Costa Rica. Its CEO, David Carruthers, was arrested while transiting the U.S.
Charges:
Racketeering, mail fraud, Wire Act, and UIGEA violations.
Outcome:
Company shut down; Carruthers pleaded guilty.
Significance:
Expanded application of UIGEA and RICO to online gambling companies operating abroad.
3. United States v. Daniel Tzvetkoff (2010)
Court: Southern District of New York
Facts:
Tzvetkoff ran a payment processing company that helped gambling sites hide transactions from U.S. banks.
Charges:
Bank fraud, wire fraud, money laundering.
Outcome:
Cooperated with authorities and testified in later cases.
Significance:
Key figure in bringing down major poker sites (see next case). Shows how financial back-end players are also targeted.
4. United States v. PokerStars, Full Tilt Poker & Absolute Poker (“Black Friday” Indictments, 2011)
Court: Southern District of New York
Facts:
These were the three largest online poker sites operating in the U.S. after UIGEA. They processed payments through shell companies.
Charges:
Bank fraud, money laundering, UIGEA violations.
Outcome:
Sites shut down; $700+ million in forfeitures; executives charged or fled.
Significance:
The most high-profile federal crackdown on online gambling. It effectively ended the first era of U.S.-facing online poker.
5. United States v. Lawrence DiCristina (2012)
Court: Eastern District of New York
Facts:
DiCristina hosted underground poker games and was prosecuted under the Illegal Gambling Business Act.
Legal Issue:
Whether poker was considered “gambling” under federal law.
Outcome:
Trial judge ruled poker wasn't gambling under IGBA; 2nd Circuit reversed and upheld conviction.
Significance:
Clarified that poker is gambling under federal statutes — key ruling for future cases.
6. United States v. Nelson Burtnick (2012)
Court: Southern District of New York
Facts:
Burtnick was a payment executive for Full Tilt Poker, accused of misrepresenting gambling payments to banks.
Charges:
Conspiracy to commit bank fraud and money laundering.
Outcome:
Pled guilty; cooperated with prosecutors.
Significance:
Revealed that UIGEA violations often depend on how payments are masked — not just on gambling content.
🧠 Legal Takeaways
UIGEA doesn’t criminalize gambling itself, but targets financial processing of illegal bets.
Wire Act applies to bets across state or national lines — even if hosted offshore.
Courts will hold foreign-based companies accountable if they serve U.S. customers.
The government often pairs gambling charges with money laundering, fraud, or conspiracy to increase penalties.
State laws still play a role — many federal prosecutions reference state definitions of illegal gambling.
"Skill" defenses (e.g., for poker) have largely failed in federal courts.
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