US govt puts the squeeze on online gambling
By paul
US Federal prosecutors are trying to stop online gambling in the United States by discreetly threatening US companies that have business relationships with Internet gambling interests, according to lawyers ad industry executives cited by a report in the New York Times.

US media, PR and technology firm could be legally liable for 'aiding and abetting' online casinos, thereby offering US prosecutors one avenue to get at the offshore operations that lie beyond their jurisdiction.

Lawyers cited by the report said they did not know of any charges being filed. However, the strategy has already had successes without going through legal channels. Several big media groups including Infinity Broadcasting, Clear Channel Communications and the Discovery Networks pulled ads for Internet casinos last Autumn in case further investigations led to prosecutions.

The probe into the online gambling industry, lawyers said, is being conducted by Raymond W. Gruender, the US attorney for the Eastern District of Missouri. Gruender convened a grand jury last year in St. Louis to issue summonses to several companies and individuals, including Sebastian Sinclair, a market researcher and online gambling industry expert.

Sinclair said he received a subpoena at the end of February which compelled him to testify before the federal grand jury next month.

However, the tactic to target business support services might backfire, lawyers and some legal experts say. That is because advertising for Internet casinos could be guaranteed the media groups by the US First Amendment.

Others, however, say prosecutors may be able to bring cases on the grounds that US companies profit from the online casinos, which are illegal in the US.

Although the legal situation is still unclear, the inquiry is already having some success just by asking questions.

'The government has floated these legal theories without having to prove anything,' said Lawrence G. Walters, a Florida lawyer who specializes in Internet gambling law. 'But they've achieved their end result: scaring the players and the industry.'

David Carruthers, CEO of, an online sports bookmaker based in Costa Rica, said he was licensed in Costa Rica, in Antigua, in the Dominican Republic and in the UK. alone, he said, has 1.2 million registered US users and took 33 million bets from North America last year, mostly from the US.

He said his advertisements had been pulled recently from outlets such as the Howard Stern show, which is produced by Infinity Broadcasting, a division of Viacom.

Media companies are 'being held hostage,' Mr. Carruthers complained. 'Unless they stand up, they're going to lose millions in dollars from the advertising.' used to advertise on city buses in New York. But the ad company, Viacom Outdoor, no longer takes online gambling advertisements, according to a company spokesperson.

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