The Internet a Disruptive Force in Another Sector — the Gambling Industry

A mismatch between the US government attitudes on controlling gambling and the pervasive effects of the Internet have produced another legal dilemma for businesses, both domestic and foreign, that rely on the gambling industry. Recently, US marshals seized $3.2 million from Discovery Communications, a television and media company, paid to it by its customer, Tropical Paradise, a Costa Rica-based Internet casino operator. Discovery was told by government officials that it could be party to illegal activity by broadcasting advertisements for Tropical Paradise. Some observers believe that any company that does business with an offshore casino, including software developers and other consultants, could be in danger of having the proceeds of their business seized. According to a report in the New York Times, tens of millions of Americans place bets over the Internet. The US government's attempts to exert an extra-territorial influence on activity that is legal overseas runs up against the WTO preliminary ruling that in prohibiting online gambling the US is violating its free trade obligations (see a previous issue of E-TIPSâ„¢: "Antigua and Barbuda Prevail Over US in WTO Ruling to Permit Online Gambling", Vol 2, No 22, April 14, 2004). For the New York Times story, see: http://www.nytimes.com/2004/05/31/technology/31gambling.html Summary by: Amy-Lynne Williams