Online-gaming foe takes case to Ashcroft

David Strow

Friday, June 8, 2001 | 11:09 a.m.

One of the gaming industry's most outspoken opponents is taking his fight against Nevada's Internet gaming bill to Attorney General John Ashcroft.

Tom Grey, executive director of the National Coalition Against Gambling Expansion (NCAGE), says he's concerned about the Nevada Legislature's passage of a bill that would authorize state gaming regulators to allow Internet gambling.

To head off the possibility of Nevada casinos offering Internet gambling, Grey said he and his organization plan to lobby Ashcroft and the Justice Department to initiate a nationwide crackdown on Internet casinos taking bets from Americans.

Grey said he's consulted with Rep. Frank Wolf, R-Va., a longtime opponent of the gaming industry, to discuss Wolf's involvement in lobbying the Justice Department. Ashcroft has been warm to Grey's organization in the past -- 18 months ago, as a U.S. senator representing Missouri, Ashcroft blasted the negative effects of gambling on society at a national convention of the NCAGE.

"We will try to do everything possible to make sure this is something that has his (Ashcroft's) full attention," Grey said. "You do not let the 800-pound gorilla get a lot of momentum going. You put it back in the cage, and Justice can do that. It's absolutely imperative that a message comes out that says to the Las Vegas people, 'Proceed at your peril.' "

The industry's political backers don't appear to have a strategy to counter Grey's efforts, but they are downplaying them, noting that Nevada will not proceed with Internet gambling unless state regulators are satisfied that it does not violate federal law, making the issue of a crackdown a moot point as far as Nevada is concerned.

"It's just another one of Tom Grey's idiotic remarks," American Gaming Association Chief Executive Frank Fahrenkopf said. The AGA issued a statement last month repeating its opposition to Internet gambling, saying it was concerned it could not be properly regulated.

Grey's organization first contacted Ashcroft to launch the anti-Internet crackdown in April. David Robertson, a coalition board member and past chairman who met with Justice officials, said the organization is calling on Ashcroft to form a task force that would prosecute Internet casinos for violations of the federal Wire Act of 1961.

One of the biggest concerns Nevada gaming regulators have had about Internet gambling is the possibility that offering gambling on the Internet would violate this law. The Justice Department has long stated that Internet gambling isn't allowed under this law, but has only pursued cases against Internet-based sports books.

Although the proposal was made before the Nevada bill passed, "I think it's even more important now that the attorney general act, because now we have the muscle and the money (of the gaming industry) behind it," Robertson said.

"I really think that bringing Internet gambling into the home is the scariest thing that can possibly happen," Robertson said. "We think a relatively small task force and some sting operations could have a pretty big impact in shutting down some of these things. When nothing's done, the industry becomes emboldened, and that's when we get laws passed as we see in Nevada."

Bill Bible, president of the Nevada Resort Association, said the state's political organization for the gaming industry hadn't discussed the possibility of discussing the Wire Act with Ashcroft.

"Now I suspect that since Tom Grey has brought it up, we'll consider it," Bible said.

But Bible said he couldn't say what message, if any, the NRA would relay to Ashcroft.

"The chairman of the Nevada Gaming Commission (Brian Sandoval) has indicated he'll approach the Justice Department to seek an opinion as to (the legality) of wagering on the Internet," Bible said. "I don't know what, if anything, we'd do. It's going to be an area discussed pretty extensively over the coming months and years."

Bible also made it clear that the gaming industry is hardly on the verge of launching Internet casinos left and right.

"We would not move forward until this legal question is resolved," Bible said. "Clearly we don't want to be in a position where we're violating any kind of federal law."

Federal bills that would specifically ban Internet gambling in the United States have failed to pass in previous sessions of Congress. That's left the Wire Act as the sole law that could address the matter, though there's fierce debate on whether that law even applies to Internet gambling. Until that question is answered, Nevada gaming authorities have made it clear they won't authorize Internet gambling.

Though Justice has said the Wire Act prohibits Internet gambling, that position has been tested just once, when federal officials prosecuted Jay Cohen for operating an Internet sports book in Antigua. A federal jury convicted Cohen for violations of the Wire Act, in a move believed to set a clear precedent that sports bets over the Internet do violate federal law.

There's been no similar case against an operator of casino-style games on the Internet, though a pending civil case from New Orleans could establish a precedent favorable to Nevada.

In a class-action lawsuit, Visa and MasterCard were accused of violating racketeering law and aiding violations of the Wire Act by allowing their credit cards to be used on Internet casinos. In a March decision, U.S. District Judge Stanwood R. Duval Jr. denied these claims.

"Even a summary glance at the recent legislative history of Internet gambling legislation reinforces the court's determination that Internet gambling on a game of chance is not prohibited conduct under (the Wire Act)," Duval wrote.

That decision is on appeal to the 5th Circuit Court of Appeals in New Orleans. If it holds, Nevada casinos would be clear to operate Internet casinos without fear of violating the Wire Act, said Las Vegas attorney and Internet gaming legal expert Tony Cabot.

"The problem (with Grey's effort) is that the attorney general can only enforce laws against acts that are illegal," Cabot said. "If the circuit court upholds this decision, the attorney general will not have anything to enforce. (The Justice Department) does not make law, it enforces laws."

Because of the significance of the case, Cabot said he hopes a client will hire him to file a "friend of the court" brief with the circuit court. Cabot has long argued that the Wire Act is inapplicable to casino-style games conducted over the Internet.

"I would hope I could play some rule in that lawsuit before the 5th Circuit," Cabot said. "I think that's a very important forum in which to express views (on the Wire Act)."

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