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Federal Justice Department Advises US Virgin Islands Not to Host I-Gaming Services

31 January 2004

The U.S. Virgin Islands wants to regulate Internet gambling, and the territory's justice department believes it can do so without violating federal U.S. laws, but the U.S. Department of Justice indicated in a letter dated Jan. 2 that it disagrees.


". . . We believe that the acceptance of wagers by gambling businesses located in the Virgin Islands from individuals located either outside of the Virgin Islands or within the Virgin Islands (but where the transmission is routed outside the Virgin Islands) would itself violate federal law."
- David Nissman
US Dept. of Justice

Judge Eileen Petersen, chair of the U.S. Virgin Islands Casino Control Commission, received the letter Jan. 8 from David Nissman, a U.S. Attorney for the District of the Virgin Islands, warning that the Criminal Division of the U.S. Department of Justice in Washington "believes that federal law prohibits all forms of Internet gambling."

The U.S. Virgin Islands, whose legislature approved regulations for I-gaming in August of 2001, is well into the process of making legalized I-gaming a reality. The Casino Control Commission took a major step in September 2003 by granting a hosting license to USVIHost, which said at the time that they could have a temporary facility operating within six months if necessary.

The Casino Control Commission is reviewing the letter and will likely release a formal statement early next week.

"Right now we are studying their comments and doing some of our own analysis," a spokesperson for the commission told Interactive Gaming News.

In November 2002, Judge Petersen received a reply to Iver Stridiron, Attorney General for the Virgin Islands, concerning the consistency of the Virgin Islands Internet Gaming and Gambling Act with U.S. federal law.

Judge Petersen received notice from U.S. Virgin Islands Attorney General Iver Stridiron in November 2002 that the I-gaming legislation accords with federal law.

Stridiron wrote, "The Virgin Islands Internet Gaming and Gambling Act would be considered consistent with a federal and territorial law as long as Internet gambling is limited to games of chance, players are of lawful age and no bets are received or taken from an individual located in a jurisdiction that prohibits gaming."

At the time of the writing, the U.S. Department of Justice held the opinion that Internet gaming was prohibited because of the Wire Act, the Travel Act, and Section 1955 of U.S. Code 18.

The Wire Act refers explicitly to "sporting events or contests," but does not mention casino gambling, so Stridiron reasoned that casino gambling was tacitly authorized. Furthermore, the Fifth District Court of the U.S. had also ruled in the case of In re Mastercard that the Wire Act is not applicable to casino wagering.

Stridiron also held the opinion that the Travel Act was not applicable to gaming in the Virgin Islands because "the statute defines 'unlawful activity' as any business enterprise involving gambling . . . in violation of the laws of the state (or territory) in which they are committed or of the United States." He said the Virgin Islands were exempt from the Travel Act because they had already passed gaming regulation that legalized such gaming. A stipulation, however, was that operators from the islands could not accept bets from jurisdictions where gambling is not legal.

Stridiron held the same opinion on Section 1955 of U.S. Code 18 because it "defines 'illegal gambling business' as a gambling business as gambling business that is violation of the law or state (or territory) in which it is conducted."

The recent DOJ letter, however, emphasizes that the U.S. department considers all forms of Internet gambling to be prohibited under the Wire Act, and does not agree with the Fifth Circuit's handling of In re Mastercard. The department clarified this view in a letter to a Judiciary Committee of the U.S. House of Representatives dated July 30. The Committee had asked the Justice Dept's opinion on the matter as it was evaluating statutes of HR 21, the "Unlawful Internet Gambling Funding Prohibition Act."

Nissman acknowledges that the Virgin Islands has passed legislation permitting online gambling within its borders, but says the DOJ does not believe that makes the islands immune to the Travel Act.

"Nonetheless," he wrote, "we believe that the acceptance of wagers by gambling businesses located in the Virgin Islands from individuals located either outside of the Virgin Islands or within the Virgin Islands (but where the transmission is routed outside the Virgin Islands) would itself violate federal law."

Documents:

US DOJ Letter to Eileen Peterson (Jan. 2, 2004)

The Stridiron Letter (Nov. 15, 2002)

Federal Justice Department Advises US Virgin Islands Not to Host I-Gaming Services is republished from iGamingNews.com.
Bradley Vallerius

Bradley P. Vallerius, JD manages For the Bettor Good, a comprehensive resource for information related to Internet gaming policy in the U.S. federal and state governments. For the Bettor Good provides official government documents, jurisdiction updates, policy analysis, and many other helpful research materials.

Bradley has been researching and writing about the business and law of internet gaming since 2003. His work has covered all aspects of the industry, including technology, finance, advertising, taxation, poker, betting exchanges, and laws and regulations around the world.

Bradley Vallerius Websites:

www.FortheBettorGood.com
Bradley Vallerius
Bradley P. Vallerius, JD manages For the Bettor Good, a comprehensive resource for information related to Internet gaming policy in the U.S. federal and state governments. For the Bettor Good provides official government documents, jurisdiction updates, policy analysis, and many other helpful research materials.

Bradley has been researching and writing about the business and law of internet gaming since 2003. His work has covered all aspects of the industry, including technology, finance, advertising, taxation, poker, betting exchanges, and laws and regulations around the world.

Bradley Vallerius Websites:

www.FortheBettorGood.com