The federal Travel Act, 18 U.S.C. § 1952, is one of a group of federal laws criminalizing various business enterprises that are unlawful at the state level. The Act, makes it a federal crime to travel among the states or internationally or to use the U.S. mail or other means of interstate commerce to “promote, manage, establish, carry on, or facilitate …unlawful activity…”
“Unlawful activity” includes “any business enterprise involving gambling,…in violation of the laws of the State in which they are committed…
Jeffrey Rodefer notes: “A conviction under the Travel Act necessitates a violation of either a state or federal law. However, the government need not prove that the defendant specifically intended to violate state or federal law. [Footnotes omitted.] Thus, this is a crime where if you intended to commit the act it does not matter if you in fact knew that your act was a violation of any specific state criminal law.
A Potential Defendant
This article considers the plight of Mr. Publisher, a resident of Nevada, who controls Publishing Company, a business formed under Nevada law, which publishes and distributes Gambling Magazine from its offices in Las Vegas. Mr. Publisher and his employees and agents actively solicit payments from online gambling sites to run advertisements that, directly or by ill-disguised implication, encourage readers to play for “real money” at various online casinos and cardrooms located in foreign jurisdictions and operating over the Internet. The casinos and cardrooms accept deposits from residents of Nevada, as well as many other states, and then facilitate gambling with those deposits over the Internet in the virtual casinos and cardrooms.
Gambling Magazine runs articles that discuss the virtues and legality of online gambling. Publishing Company also operates under the Gambling Magazine name its own website, which receives revenue from these online gambling businesses on a “click-through” basis, compensating it based on either an agreed upon fixed dollar amount for each person clicking through and making a deposit into a “real money” account or on a percentage of the revenue earned by the online site from each such person
Some, but not all of the advertisements contain a self-serving “notice” in small type that a player should check with the local jurisdiction about the legality of Internet gambling before playing in real-money games. In addition the Gambling Magazine website contains a notice to U.S. citizens that information it provides is for news and entertainment purposes only, and that use of the information in violation of any federal, state, or local laws is prohibited.
It is unlikely these disclaimers will protect Publishing Company from charges of its violating and/or aiding and abetting the online casinos and cardrooms in violating state and federal anti-gambling laws. First of all the disclaimers are directed to the conduct of the reader in playing on an online gambling site, not to the conduct of the offering or promoting the offering of online gambling by the operator of the websites. Criminal charges would involve the conduct of Publishing Company in violating state and federal laws, not in the conduct of Gambling Magazine readers in playing on those sites. Second, where Publishing Company and its affiliates know or should know that the operations of the websites violate state laws, a cautionary word to a user to assure that his or her use is legal is immaterial in considering whether a criminal violation has occurred.
Mr. Publisher and employees and affiliates of Publishing Company use the telephone and other means of interstate commerce to solicit online cardrooms to place advertisements in Gambling Magazine and the magazine is distributed though the U.S. mail and by common carriers operating in interstate commerce. These executives, employees and affiliates also travel from state to state and internationally where they meet with the representatives of some of the online cardrooms to discuss various matters involving their respective businesses.
Finally, Mr. Publisher is anecdotally rumored to have caused his company to impose on each online cardroom that is allowed to pay to advertise in Gambling Magazine the further requirement that the online gambling business provide Publishing Company with further revenue measured, directly or indirectly, by reference to the amount of revenue earned by the online casino or cardroom. The published rates for advertisers in the Internet gambling business are roughly twice the rates for other advertisers.
The Predicate Offenses
Jeffrey Rodefer says: “The courts have determined that the use of the mail, telephone or telegraph, … is sufficient to establish that a defendant ‘used a facility of interstate commerce’ to further an unlawful activity in violation of the Travel Act.” He goes on to note that the Travel Act ” refers to state law only to identify the defendant’s unlawful activity, the federal crime to be proved in § 1952 is use of the interstate facilities in furtherance of the unlawful activity, not the violation of state law; therefore § 1952 does not require that the state crime ever be completed.”
Well, that does seem a bit harsh. Indeed, in an article published in an online newsletter one commentator expressed the view that it was not conceivable the government would utilize the Travel Act to prosecute online gambling. Let’s look at the activities of Mr. Publisher and his retinue on behalf of Gambling Magazine to see if there are apparent violations of Nevada criminal laws that make it “conceivable” a criminal prosecution might be brought.
Under NRS 465.092 it is a criminal misdemeanor to use the Internet to accept or receive a bet from anyone in Nevada. The statute specifies that where the person accepting the bet is outside of Nevada, then the crime is deemed to have commenced outside the state but to be consummated in Nevada.
Another Nevada statute (NRS 463.160) requires that operators of “for profit” gambling activities procure a license before conducting business in the state. That statute makes it a felony “for any person, either as owner, lessee or employee, whether for hire or not, either solely or in conjunction with others: (a) to deal, operate, carry on, conduct, maintain or expose for play in the State of Nevada any gambling game,…or (d) to receive, directly or indirectly, any compensation or reward or any percentage or share of the money or property played, for keeping, running or carrying on any gambling game…without having first procured, and thereafter maintaining in effect, all federal, state, county and municipal gaming licenses as required by statute.
NRS 195.020 says: “Every person concerned in the commission of a felony, gross misdemeanor or misdemeanor, whether he directly commits the act constituting the offense, or aids or abets in its commission, and whether present or absent; and every person who, directly or indirectly, counsels, encourages, hires, commands, induces or otherwise procures another to commit a felony, gross misdemeanor or misdemeanor is a principal, and shall be proceeded against and punished as such. The fact that the person aided, abetted, counseled, encouraged, hired, commanded, induced or procured, could not or did not entertain a criminal intent shall not be a defense to any person aiding, abetting, counseling, encouraging, hiring, commanding, inducing or procuring him.”
In my view Mr. Publisher and his employees are, at the least, aiding and abetting the online casinos and cardrooms to violate the misdemeanor anti-Internet statute noted above, and perhaps the felony licensing statute, as well.
Targeting Doctrines Apply
The usual defense of an online casino is that it is legally licensed in one or more jurisdictions where it operates and thus is immune from prosecution in a place like Nevada where it is not physically present.
There are numerous decided cases that have evolved and applied the Zippo “targeting doctrine” to effectively assert jurisdiction over out-of-state website operators. The Zippo line of cases holds that where a website operator targets its business activities toward a particular state, then it can expect to be haled into a court there and have local law applied to it. Targeting requires the defendant’s website to have an interactive feature, such as accepting orders for goods from the purchaser in the targeted state. The online casinos and cardrooms certainly “target” Nevada residents in that sense.
The same sort of principle was recently applied in a criminal context in United States v. Lee, No. 01-1629 (3rd Cir. 2/20/2004) (3rd Cir., 2004). Defendant Lee was an official of the International Boxing Federation, which is headquartered in the state of New Jersey. He was convicted under the Travel Act (as well as several other laws.) The predicate state offense he was charged under was a New Jersey commercial bribery statute. Lee was found to have accepted bribes to cause various boxers to receive higher positions in the IBF rankings.
Lee defended on the ground that “the vast majority of the conduct constituting ‘commercial bribery’ took place outside the state of New Jersey in states that either do not consider such conduct a crime, or do not consider it as serious a criminal offense as New Jersey does.” Lee contended that “the bribe money was handed to him by Beavers in Virginia and that the agreements between Beavers and Fernandez, the IBF’s South American representative, were made outside of New Jersey.” Id. at 12. The Third Circuit held:
“’Acts done outside a jurisdiction, but intended to produce and producing detrimental effects within it, justify a state in punishing the cause of the harm as if [the defendant] had been present [in the state] at the effect.’ Strassheim v. Daily, 221 U.S. 280, 284 (1911). See also United States v. Woodward, 149 F.3d 46, 66 (1st Cir. 1998). Cf. Model Penal Code § 1.03…. [The effects within a state of extraterritorial conduct need not be unique to that state in order to justify the exercise of jurisdiction….” Id at 12-13. [Emphasis supplied.]
On the basis of the Zippo line of cases and the holdings in U.S. v. Lee and the cases it relies on, it appears that the Nevada criminal statutes noted above would serve as appropriate predicates for a Travel Act charge against Mr. Publisher, et al.
Commercial Free Speech Considerations Are Immaterial
Mr. Publisher might try to defend his activities on the basis of the protection provided commercial speech by the First Amendment to the U.S. Constitution. He would argue that Gambling Magazine has a protected right to carry the advertisements. The U.S. Department of Justice has recently launched a widespread campaign to curb this kind of advertising. But, even assuming that there is a Constitutionally protected right to run these advertisements they may nonetheless serve as the basis to establish the predicate offense. Even with a protected right to say something, the speaker is liable for the legal consequences of that speech.
Here the advertisements promote gambling activities that appear to violate, or at least aid and abet the violation, of one or more Nevada statutes. Here Mr. Publisher profits from running the advertisements when he knows of the ongoing controversy over the legality both of online gambling and of advertising online gambling.
That alone is probably not enough to constitute aiding and abetting. The legal test to establish aiding and abetting is that the defendant “willfully associated with the criminal venture, participated in it as something he wished to bring about, and sought by his action to make it succeed.” United States v. Payne, 750 F.2d 844, 860 (11th Cir.1985); United States v. Richardson, 764 F.2d 1514, 1525 (11th Cir.), cert. denied, 474 U.S. 952, 106 S.Ct. 320, 88 L.Ed.2d 303 (1985). The evidence must show that the defendant shared the criminal intent of the principal in order to prove association. To show participation, the evidence must show that the defendant committed an overt act that assisted in the success of the venture. United States v. Lindell, 881 F.2d 1313, 1323 (5th Cir. 1989), cert. denied, 496 U.S. 926 (1990).
But, here Mr. Publisher appears to share directly in the revenue generated by the online gambling. In those circumstances any First Amendment protection that may be afforded to commercial speech is immaterial. Mr. Publisher remains responsible for the consequences of his promotion of online gambling in apparent violation of Nevada criminal statutes.
It strikes me as unlikely that any part of this publishing group would be criminally charged if the group merely ran the advertisements for the online casinos and cardrooms in exchange for a flat dollar fee. Rather, I think it is the direct participation in the stream of revenues earned by the sites coupled with the running of the advertisements that is likely to draw the adverse scrutiny of law enforcement authorities. Anecdotally, I have been advised that at least one United States Attorney’s office has indirectly confirmed that view by entering into an arrangement with a publication similar to Gambling Magazine in which the magazine was permitted to continue running advertisements for online cardrooms as long as it did not receive payments for the ads based on the number of persons who opened accounts at the cardrooms or receive a share of the revenue the cardroom earned from players who signed up as a direct result of the ads in that magazine.
It is one thing to be paid to run an advertisement for an online casino or cardroom. It is quite another to participate directly in the revenues generated by the operation of a given online casino or cardroom. The participation is the hallmark of the offense or of the aiding and abetting of the underlying offense.