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Israel bonds with US over online betting ban

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Internet Security Threat Report 2014

Israel has officially joined the online betting prohibitionist club, led by staunch ally the United States and the collaborationist French.

According to the online edition of the Globe, Judge Abraham Heiman ruled last week that a foreign company may not take online bets from Israeli citizens, regardless of where it is headquartered or its servers are located. Israeli authorities had previously focused on stamping out that notorious threat to public morals, playing online backgammon for money. The real threat is to the Israeli government’s gaming monopoly, which provides drastically lower returns to players.

Although Eran Shendar, Israel’s top prosecutor, had already made it clear in December that online gambling was considered illegal, the detention of Victor Chandler CEO Michael Carlton last week opened a new front in the government’s war on online gambling. Following America’s lead, Israel has now thrown down the gauntlet to those offering services from abroad. Judge Heiman even cited two New York state court rulings as precedent for establishing jurisdiction over Victor Chandler, a British company.

Jurisdiction over the internet has proven to be one of the thorniest issues for the online gambling world, a point noted with some frustration by Judge Heiman. Although your reporter is an American attorney, not an Israeli one, the troublesome issue cited by the judge appears to be common to both American and Israeli law- namely, that transactions over the internet (or the telephone, or through the mail) are considered to have taken place wherever received. This is due to a well established principle of sales law, and it was what tripped up Jay Cohen, founder of the World Sports Exchange, whose case has been covered here previously.

Cohen returned to the US to fight the DOJ under the belief that since his business and all of its servers resided in Antigua, where the transactions were processed, he should not be subject to American jurisdiction. The DOJ sidestepped that problem altogether by going to great lengths to establish that the WSE had marketed itself extensively to the American public, thereby availing itself of the American market and American law, and Jay Cohen ended up in prison.

This concept originally was developed to protect the little guy or gal - a little old lady in California, for example, defrauded by mailings from a New York insurance company that cashed her check in New York, could be protected by California law due to the fact that the company had “purposely availed” itself of California jurisdiction. This principle gets considerably spookier, however, when the federal government is the one invoking it.

According to company filings, Israel was Victor Chandler’s 2nd biggest market in 2006. Apparently the massive marketing campaign by Victor Chandler in Israel last year, including ads run on public buses, paid some dividends, and proved a bit much for Judge Heiman to overlook. ®

Burke Hansen, attorney at large, heads a San Francisco law office.

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