Dep. of Justice Win The Online Gambling Blitz
Published: Sunday, January 22, 2006 Online-Casinos.com
DEPARTMENT OF JUSTICE WIN THIS ROUND OF THE ONLINE GAMBLING BLITZ
$7.2 million "settlement" paid The Sporting News
The US Department of Justice's intimidating blitz on the advertising media in the States chalked up a win this week when The Sporting News, one of the nation's oldest sports-centered media companies, entered into a $7.2 million "settlement" to resolve accusations that it promoted online gambling by publishing and broadcasting advertisements for online casinos overseas, the Department of Justice announced.
Under the settlement, The Sporting News, which is operated by Vulcan Sports Media, a company owned by the Microsoft co-founder Paul G. Allen, has agreed to pay a $4.2 million fine. It will also complete a three-year public service campaign, valued at $3 million, to educate people about illegal Internet and telephone gambling.
The agreement is the latest development in an Internet gambling investigation led by the United States attorney's office in the Eastern District of Missouri. Under the investigation, begun in 2003, federal prosecutors have reached settlements with a handful of American media companies - and sought information from dozens of others under a legal theory that publishers and broadcasters are guilty of promoting and profiting from Internet gambling by running ads for it.
Catherine L. Hanaway, the United States attorney for the Eastern District of Missouri, said prosecutors had warned such companies that their activities were analogous to advertising on behalf of drug dealers and child pornographers.
The media companies "are aiding and abetting in the promotion of these illegal gambling sites," she said. Other investigations into the activity of media companies continue.
In a statement, The Sporting News said that as part of the settlement it had neither admitted nor denied its legal liability. The amount of the settlement reflects profits that The Sporting News received from the spring of 2000 through the end of 2003 for Internet gambling advertisements that ran in its magazines, on its Internet site and on radio programs.
Some legal experts have said they question the viability of the legal theory used by federal prosecutors to attack the industry indirectly by going after American media companies. Critics of the government position said media companies might be entitled to First Amendment protections that allow them to broadcast or print advertisements for companies that are acting legally in their own jurisdictions.
And Casino City has challenged the DoJ's actions in court.
In July 2003, Ms. Hanaway said, prosecutors sent letters to trade organizations representing major media organizations stating that their members could be violating the law by accepting advertising from offshore casinos. Shortly after, there was a significant drop in the number of American media companies accepting such ads. But the advertising has begun to show up broadly in the last year as it appears that prosecutors are not intending to bring widespread prosecutions, according to Internet gambling analysts.
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