Can you imagine opening a business in a foreign country and being regulated by the State of NJ or the U.S. government? This is a flagrant violation of the sovereign rights of the foreign country and people doing business there. Sad to say, it is happening right now.
Jay Cohen, of the World Sports Exchange in Antigua, has become the first person convicted for operating an "illegal" sports gambling business on the Internet. He was "caught" by undercover FBI agents, who opened accounts and wagered on games. Jay Cohen now faces up to 19 years in prison.
Title 18, Section 1955 of the United States Code Annotated prohibits illegal gambling businesses. An "illegal gambling business" means a gambling business that "is a violation of the law of a state or political subdivision in which it is conducted." Entrepreneurs have obtained gambling licenses from countries as diverse as Antigua, Germany and Venezuela to accept wagers through the telephone or Internet from customers around the world making them legal gambling businesses. Yet, the U.S. has filed charges against 22 individuals, and already convicted Cohen, for operating a legal gambling business in a foreign country.
From my perspective this is truly frightening because it could have been me! Five years ago, I thought this industry was a terrific business about to grow dramatically -- it has - so I investigated further. I did consulting work for a sports book and lived and worked in Antigua for over a year. Though I started a construction company there instead (and ironically built the office building that houses the Antiguan gambling regulators), I was offered the position of General Manager for one of the sports books.
During my investigation of the industry, the legality was a major concern. I called or wrote every government office I could think of - Attorney General, U.S. Attorney, Legalized Games of Chance Control, New Jersey Casino Control Commission, New Jersey's Gaming Enforcement Division, FBI (yes, the same FBI that "caught" Cohen), Postal Inspectors, and even the Secret Service. Not a single one said it was illegal.
A Department of Justice spokesman was telling numerous publications that the U.S. lacked jurisdiction and a representative of the Gaming Enforcement Division told me this did not violate any NJ laws. Additional support for the legality of the business was the dozen or so public companies at the time operating similar businesses and the acceptance of advertising by major media outlets.
I even consulted attorneys, who said that it appeared to be legal, with the caveat that without a precedent you were never sure how a law would be interpreted. At worst, a prudent man defense would be available: regulators would tell offshore gambling operations to cease and desist.
What chance do you or I have of trying to obey the law if regulators and attorneys aren't sure if something is legal or not?
A new bill, co-sponsored by Senator Robert Torricelli, D-N.J., would ban cyber gambling, though segments of the gambling industry with good lobbyists - dog racing, horse racing and state run lotteries - would be exempt. Even the Justice Department has criticized this aspect of the bill. If it is already "illegal," why do we need a new law to make it illegal?
Now, NJ regulators, working for a state that has a monopoly on the lottery and which owns two horse racing tracks, have announced they, too, plan on cracking down on cyber gambling.
Ignorance of the law is no excuse unless, of course, you are a regulator. I am appalled someone could be found guilty under present law and its regulatory ambiguity. But my biggest question in all this: Why should the government be trying to stop us from gambling in the first place?
Gambling is a form of entertainment that is older than America. When Thomas Jefferson wrote in the Declaration of Independence "and the pursuit of happiness," it is safe to say that included gambling.
While politicians focus on the negative aspects of gambling, studies show casino players have above average levels of both income and education. Contrast that to state run lotteries that have the lowest payouts in gambling and whose players have lower than average incomes.
Gambling is a consensual "crime" that has no victims. No harm, no foul. As a libertarian, I believe that the government has no right to regulate activities where no one or their property is harmed. Any new legislation should be to remove prohibitions on gambling, not increase them.
Lou Elwell is Secretary of Libertarians of Monmouth County. Comments can be
emailed to LibertarianLou@aol.com.