July 28, 1999

Judge rules Internet gambling subject to New York state law

NEW YORK (AP) -- New Yorkers who gamble via the Internet are playing in a virtual casino inside their computers and are subject to state gaming laws even if the gambling company is based overseas, a judge ruled.

State Attorney General Eliot Spitzer hailed the decision by State Supreme Court Justice Charles Edward Ramos against World Interactive Gaming Corp., of Suffolk County, as precedent-setting. He called it a victory for his office's recently established Internet Bureau.

"There were a couple of other cases concerning offshore gambling in the pipeline, but we believe this is the first ruling by a judge anywhere," Spitzer spokesman Scott Brown said. The ruling by the judge was made last week and made public Monday.

The case began in February 1998 as a probe into allegations that WIGC had improperly sold shares in a casino gambling business for $10,000 each, taking in some $1.8 million from 114 investors, 10 of them in New York.

In June 1998, state investigators tapped into WIGC Web sites and placed bets, according to court papers. The company's computer didn't accept a bet from a state investigator when she typed in New York state as her home on a sign-in form, so she typed in Nevada instead, said WICG's attorney, Anthony Colleluori.

The company had contended that because its computer servers were located and licensed on the Caribbean island of Antigua, the state had no jurisdiction.

In a 20-page ruling, the judge dismissed that claim as irrelevant and set a Sept. 9 hearing on restitution for investors.

"The act of entering the bet and transmitting the information from New York via the Internet is adequate to constitute gambling activity within New York state," the judge said.

The judge said WIGC had violated state and federal laws, including the federal Interstate Wire Act, with a gambling Web site that "creates a virtual casino within the user's computer terminal."

"This is an important decision for law enforcement throughout New York and perhaps throughout the nation," Spitzer said in a statement. "The judge has clearly stated that it doesn't matter whether someone promoting gambling to state residents is based in Albany, Albuquerque or Antigua. New York state laws still apply."

World Interactive's Antigua subsidiary went online a year ago, but a state lawsuit forced it to halt operations, Colleluori said.

He said that WIGC had never taken bets from New Yorkers, and he argued that there are no state or federal laws against Internet gambling. He said the company would appeal the ruling. Despite its name, in New York state the Supreme Court is just a trial-level court.

New York bars non-Indian gambling unless it's approved by the state Legislature, like horse racing and the state Lottery.