Most observers agree that the Wire Act applies to online sports betting. The feds sure think so.
Bodog (2012). In February 2012, the feds indicted Calvin Ayre, founder of Bodog, along with three other Canadians, James Philip, David Ferguson and Derrick Maloney. But as I write this, the feds don’t have anyone in custody, and many are wondering whether they’ll actually be able to find the accused in the foreign countries they reside in. Ayre et al were charged with running an online sports gambling business, and money laundering. The former carries a possible sentence of five years, and the latter charge, years. The feds also seized the Bodog.com domain, which didn’t matter much, since Bodog had been smart enough to move its business to other domains (like Bodog.eu) months before the feds’ seizure. (Forbes, 2012)
Small operators (2011). In May 2011, the feds issued indictments against some small companies taking sports bets online. It also seized their domain names. (Casino City)
Sportingbet (2006). While federal law is murky, some new state laws are not. In September 2006, the chairman of London-based Sportingbet was arrested in New York by the request of Louisana authorities for violating Louisiana’s ban on Internet gambling. One wonders why Peter Dicks thought it would be a good idea for a chairman of a UK-based Internet gambling operation to visit the U.S. right after the CEO of another UK-based Internet gambling operation just got arrested after visiting the U.S. (David Carruthers of BetOnSports, above). Perhaps he thought he’d be safe because unlike BetOnSports, Sportingbet wasn’t pushing the envelope on phone-based bets. He also probably had no idea that an individual U.S. state would consider his company to be breaking the law and would have him arrested over it. (iGamingNews)
World Sports Exchange (2000). American Jay Cohen located his situs poker online sportsbook offshore in Antigua, but when he returned to the U.S. but when he returned to the U.S. he was arrested, and in 2000 he was convicted, fined $5000, and sentenced to 21 months in prison, of which he served 17. (NY Times, Gambling 911) In January 2016, his business partner, Haden Ware, returned to the U.S. from Antigua to surrender, and pleaded guilty, with sentencing set for May 9. He’d been a fugitive since 2002. (AP)
Facilitating the transfer of funds to online gambling operators (payment processing) whether in the U.S. or not. (Risk Level: 5)
Gamblers used to get money in and out of casinos with a service called Neteller, which is kind of like PayPal. But in January 2007 the founders of Neteller were arrested in the U.S. and charged with money laundering. (Creator.com) A few days later Neteller stopped serving U.S. customers. (iGamingNews, GPWA ) Neteller eventually paid a big fine and agreed to stop serving U.S. customers. (As a result, it’s now harder for players to get money into or out of an online casino; here’s our article that explains how to make deposits and withdrawals.)
Some processors handle only payments to players from the casinos (sending checks to the players), not helping players get money into the casino. These haven’t been safe either:
In January 2011 the feds seized nearly $8 million from processors serving PokerStars, Full Tilt Poker, Ultimate Bet and Absolute Poker. (Forbes) One processor, Ira Rubin, was sentenced to three years. (ESPN) Another, Bradley Franzen pleaded guilty in May 2011, (Forbes) though as of Nov. 2015, I can’t find any report of whether he was actually sentenced. Absolute Poker co-founder Brent Buckley was sentenced to 14 months for defrauding banks. (iGamingBusiness) The whole case is explained in detail on Wikipedia.
Douglas Rennick who ran a Canadian-based processor was arrested in 2010, forfeited $17 million, but didn’t get any jail time. (Bloomberg, Online-Casinos, Best Poker Sites)
In November 2010 feds seized money in accounts belonging to payment processor eWalletXpress. The company was forced out of the U.S. market. (Casino City)
Daniel Tzvetkoff (founder) and Andrew Thornhill of the payment processor Intabill were charged with conspiracy, money laundering, and bank fraud in 2010. Thornhill pleaded guilty in June and in October was sentenced to three months in prison and fined $25,000. (Pepper Hamilton LLP)
The Feds seized $13 million from Ahmad Khawaja and Allied Wallet in 2009. (Forbes)
Some smaller actions in 2008-2011 are listed at Pepper Hamilton.
Accepting advertising for Internet gambling, in the major media (Risk Level: 5)
Google, Yahoo, Microsoft, The Sporting News (2003-2007).
In 2003 the U.S. Dept. of Justice sent a letter (PDF) to the National Association of Broadcasters and to Google, Yahoo, Microsoft, The Sporting News, warning them that accepting ads for online gambling could be illegal. So they all stopped accepting ads. In reality, it doesn’t appear that taking ads for casino & poker is illegal at all, since online casino & poker themselves aren’t illegal. Only the ads for online sportsbetting would have been clearly illegal. But all those warned stopped running the gambling ads anyway.
The Sporting News (TSN) took its time in stopping the ads (six months), which pissed off the government, which three years later fined them $7.2 million, in January 2006. The settlement represents TSN’s profits on the ads for the three years it accepted them (2000-2003), and was paid with $4.2 million in cash, and $3 million in public service ads in its own publications explaining how online gambling is illegal. (more from the Corporate Crime Reporter)
In December 2007 the three big Internet giants paid a fine for accepting ads for online gaming. Google’s fine was only about a third of a single day’s profit. (Point-Spreads.com)
The three companies had actually ceased taking online gambling ads about four years before the settlement, when they got the warning, but the feds fined them anyway — years later.
Esquire, 2005. In April 2005 the feds subpoenaed Esquire magazine for taking ads in its March issue for online poker operator Bodog.
The Dot-Net Workaround. Many online operators found a way around ad restrictions years ago: They advertise the .net version of their website, which is a play-for-free space. Of course, they’re hoping that players will click from there over to the .com version and wager for real money, or that players will just type in .com out of habit.