You turn on your TV and are confronted by this shocking news: There is a live press conference on CNN with representatives from the U.S. Department of Justice and the FBI who announce that the U.S. Attorney’s Office for the Southern District of Manhattan has obtained an indictment against you, Joseph. P. Affiliate, alleging that through your website, joeblowpoker.com, you are held to be in violation of New York State Law, specifically, Section 225.05, Promoting Gambling In The Second Degree, a Class A Misdemeanor.
So you look out the window and see several gentleman in suits get out of their cars and walk toward your house, along with a news truck from CNN, and a fairly large crowd of your neighbors who are just curious, as neighbors often are. You hurriedly go online to find out more about what you may be up against here while they bang on your door.
You discover that this law is a legitimate one, and it applies to persons who “knowingly advance or profit from illegal gambling activity.” So you check to see how illegal gambling activity is defined here, and you discover that it concerns wagers where the element of chance is a material factor, whether or not skill is involved. So that would at least seem to apply to online poker, as the element of chance is certainly a material factor, as opposed to something like an arm wrestling competition.
So they take you in, and you cover your face with your shirt as the cameras roll, even though you have to show your beer belly to viewers across the country. You retain a lawyer, and ask him how you can be charged here since you don’t reside or do business in New York State. If you did reside there, they actually may have a case against you, although they would have to prove that you knowingly promoted illegal gambling to residents of the state.
However, you have no knowledge whatsoever if this has ever been the case, and while you do get compensated for referring internet traffic to offshore online poker sites, you have no idea here of the identity of any referred players. While you are responsible for due diligence, there really isn’t any way to obtain such information at the time of the click-through, not that you have any control over this anyway. So the connection here is a very nebulous one at best, and what would be required to make this work is for them to prove that you intentionally aided visitors to commit a crime that you knew were from the prohibited jurisdictions. So on this count you’re claiming innocence and in fact claim that the charge is ridiculous.
So, given that federal authorities are involved, obviously they aren’t looking to extradite you to the State of New York to face charges, and given that the alleged crime is only a misdemeanor, that really wouldn’t make sense. So obviously there must be more to it than this, meaning that you’re alleged to be in violation of federal law, as was the case with the principles indicted in the Black Friday affair. You’ve got nothing to do with financial transactions so it can’t be the UIGEA. It’s not the Wire Act of course, since you don’t offer sports betting on your site.
So you ask your lawyer and he tells you that you’re being indicted under the Illegal Gambling Business Act, a statute designed to go after larger scale gambling operations, and this is is also the legal basis for the indictments against Poker Stars, Full Tilt, UB, and Absolute. However, in order to be subject to this statute, one of the requirements is that you have to be operating an illegal gambling operation in violation of state laws. You’re not running a gambling operation of any kind though, which would by definition involve taking wagers, you’re just have a website that runs advertisements. You also run it yourself, and this law requires that your operation involve 5 or more people, in addition to other requirements which are not met.
The authorities then claim that you are aiding and abetting in illegal gambling. They tell you that this means that you know of the criminal objective, in this case, accepting wagers from residents of New York State, and that you knowingly assist them in committing this crime. However, you plead that you have no such knowledge, and clear knowledge is an essential element in aiding and abetting.
The knowledge here must be specific, and once again you claim truthfully to have no idea of the identities of your visitors, and no knowledge of their ultimate intent, meaning whether they will gamble or just play the free money games, and no control over the click-throughs on your links based upon state of residence. While you are being compensated for your referrals through revenue sharing, this revenue is entirely based upon your providing advertising services which is the extent of your involvement.
At your point of intervention, no law has been broken under any conception, and you do not play an active role in the commission of any alleged crimes. This would be akin to your running ads in your newspaper for a drinking establishment, and then being charged with contributing to underage drinking. Some of the patrons who visit may indeed be underage, but it follows that it would be the responsibility of the owner of the bar to ensure that they comply with the law, of which you bear no responsibility for.
Someone tells you that you should have blocked access to visitors from this and other states where wagering on online poker is in violation of state law, but you then claim that this goes beyond any conceivable legal obligation you may have. This would be akin to prosecuting Google for not blocking specific blocks of internet protocol addresses when someone clicks on a link to a site which offers gambling found to be illegal in specific jurisdictions. By providing the link, you are making no claims or have any knowledge as to the legality of the visitors ultimately engaging in illegal wagering, and the idea of your being held criminally liable for actions totally beyond your control is even beyond the imagination.
Moreover, you state that you go a step further than this and provide disclaimers on your website which state that you are in no way encouraging gambling in jurisdictions where it is not legal, and also advise your visitors to take responsibility for obeying all applicable local laws. This actually goes beyond your legal duty, as whether or not your visitors commit crimes after they visit your site isn’t something you have control over anyway. This is similar to a store selling someone a gun, and the person goes out and shoots someone, and then the store is held responsible because they didn’t tell the person to not use this to murder anyone. However if they do, and this happens, they have gone above and beyond.
So this example is completely ridiculous of course but I’m using it to provide my opinion on all of the paranoia that seems to be going on among affiliates lately, worrying about the fact that they may be next on the feds’ list, or even that they may end up making the list at all. As others have pointed out, there’s always some theoretical risk where the law is concerned and you have even the vaguest of connections to any illegal activity, but we must always weigh these risks with the costs involved in looking to avoid them, and thus the exercise essentially becomes a practical one.
The applicable statutes have been designed to go after illegal gambling operators themselves, and not the channels they use to obtain visitors to their site. In my opinion at least, there’s also no reasonable interpretation of the concept of aiding and abetting that doesn’t involve the accused, which in this case would be the affiliate, having the knowledge that their actions have led to a crime being committed, and the means to materially influence the actual committing of the crime. Both elements are missing here in fact.
The bottom line here though is that in spite of our needing to protect ourselves from legal liability, at the same time we may not want to pay the high cost of no longer doing business with poker sites who are involved or at risk of being found in violation of any laws in the country we reside. What we do want to do though is to keep an eye on the practical side of things, and if and when affiliates become exposed to any real risk whatsoever, we may then step back and re-assess our potential exposure.
Right now that isn’t happening, and if it does, you can bet that the target won’t be Joe Blow’s site, it will be the Big Cheeses. So if you do operate a huge affiliate business, or if for any other reason you feel the need, you indeed may want to get legal advice from a qualified attorney who can go over your individual circumstances and make recommendations. For the rest of us, perhaps common sense will suffice, and we may wish to wait instead until the boys are at least in town before looking to bar the door.