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Jay Cohen Convicted in Internet Sports Betting Case

Cohen is free on bond until his sentencing May 23. He faces a total of 19 years in prison: five years on a conspiracy count and two years on each of seven Wire Act violations.

He could also be fined a maximum of $250,000 on each count, or twice the profits derived from his operation of the sports book, World Sports Exchange.

The jury convicted Cohen after less than two days of deliberations. The trial lasted two weeks.

This was the first defendant to come to trial in the first federal prosecution against sports betting on the Internet. The case was closely watched by the online gaming industry as well as the U.S. Department of Justice as a test of whether the 1961 Wire Act could be used against operators of Internet wagering sites.

U.S. District Judge Thomas P. Griesa made it clear early in the trial that he didn't accept the key arguments of the defense. Because of that, and his instructions to the jury, the verdict was not a surprise.

Cohen's lawyer, Benjamin Brafman of Brafman & Ross, said after the verdict that "given the court's view of the law, the evidence almost did not matter.''

"We recognized that, given the court's rulings, it was going to be impossible to get acquittal unless the jury decided to ignore the court's instructions,'' Brafman said. "This was a verdict that cannot stand appellate review because we believe the court was wrong. Mr. Cohen intendeds to file a vigorous appeal and is confident the verdict will be reversed.''

Cohen, 33, is a former stock trader who grew up on Long Island. In 1996, he and his partners founded World Sports Exchange (WSE), an online sports book that is based in, and licensed by, Antigua. Antigua is a Caribbean island that's part of the British Commonwealth.

In March 1998, Cohen and 21 others were charged for their involvement in WSE and other sports books. Ten pled guilty; seven never answered the charges and are fugitives.

"As demonstrated at trial,'' prosecutors said in a statement, "through advertisements placed in various United States newspapers and magazines, WSE invited customers from throughout the United States to contact WSE by telephone or by Internet and open a sports betting account; to wire transfer money to WSE to fund that account; and then to bet on American sporting events and contests using that account.''

The gist of Cohen's defense, Brafman said, was "that he came within the statutory exceptions of the Wire Act, which excluded him from criminal prosecution if the transmission of bets was from a jurisdiction in which it was legal to place a bet to a jurisdiction in which it was legal to accept a bet. It's not a crime in New York to place a bet. It's not a crime in Antigua to accept a bet.''

The victory for prosecutors may encourage them to pursue Internet casino operators, in addition to Internet sports book operators.

It also supports the Department of Justice's view that existing laws are sufficient to prosecute online betting cases. The department is opposed to the Kyl/Goodlatte legislation in Congress that would specifically outlaw Internet wagering.

The case was prosecuted by Joseph V. DeMarco and Teresa A. Pesce, assistant U.S. Attorneys in the Southern District of New York

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