New Jersey sues Internet casinos, claims companies operate illegally

John P. McAlpin

Tuesday, June 19, 2001 | 10:29 a.m.

TRENTON, N.J. -- New Jersey's attorney general is bringing the state's first prosecution against online casinos, claiming the offshore companies violate state laws by taking bets.

State investigators placed as many as 20 bets with three companies offering virtual card games, casino wagers and gambling on professional sports.

Using state computers and credit cards, three teen-agers also placed bets as state investigators stood by and watched, authorities alleged Monday.

"Any juvenile in New Jersey with a credit card or access to a credit card could be on line gambling in a matter of minutes," said John Peter Suarez, director of the state Division of Gaming Enforcement. "Even though we are talking about virtual casinos, they lose real dollars when they do it."

The state wants residents to know Internet gambling violates the law and that safeguards to prevent children from wagering with online casino operations are insufficient, officials said.

"It is certainly illegal, and there's no question that allowing children to gamble violates New Jersey laws," Suarez said.

In the lawsuits filed Monday, state authorities asked a Superior Court judge to order the three companies to stop taking bets from New Jersey residents and advertising in the Garden State. Authorities also want a detailed accounting of how many people from New Jersey bet and how much they won and lost.

"We're still waiting for our winnings," Suarez said.

New Jersey investigators said the state has evidence all three companies violated numerous civil and criminal laws, said First Assistant Attorney General Paul Zoubek. So far the state has filed only civil lawsuits against the three companies.

"We believe it was most appropriate to do it as a civil prosecution at this time," Zoubek said.

Even though all three Internet sites operate outside the United States, New Jersey authorities can charge them with violating state laws because people placed bets while in New Jersey, Zoubek said.

State officials in Oregon and New York have attempted to file lawsuits against online casinos and federal prosecutors based in New York pursued criminal charges in one case, said Kate Lyons, a spokeswoman for the New Jersey attorney general.

New Jersey authorities have no idea how many residents use Internet casinos, and they are unsure how many online gambling operators there are.

The state chose to investigate three -- 7Sultans.com, Alohacasino.com, and royalclubcasino.com -- because at one time they advertised in New Jersey, including billboards along the Atlantic City Expressway.

A customer service manager for Alohacasino.com refused to answer questions. New Jersey officials tracked the company to an address in Costa Rica.

At Global Interactive, the St. Kitts-based company the state says performs administrative services for Royalclubcasino.com, a woman who answered the phone would not talk about the lawsuit or the casino.

7sultans.com, which is licensed and operates in Canada, advises all players to read its disclaimers and follow local laws, said a customer service manager who refused to disclose his full name. The company routinely bars customers from countries where online gambling is illegal, he said. New Jersey officials said the company was based in Johannesburg, South Africa.

State attorneys will ask a judge to allow them to serve legal papers by e-mail since they are having trouble finding company officials directly, Suarez said.