Man Jailed in 1st U.S. Online Gambling Conviction

August 11, 2000

Man Jailed in 1st U.S. Online Gambling Conviction

By REUTERS

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EW YORK -- The first person to be convicted on federal charges of running an illegal offshore Internet sports gambling operation was sentenced to nearly two years in prison.
Jay Cohen, co-owner of World Sports Exchange, based on the Caribbean island of Antigua, was sentenced to 21 months in prison and fined $5,000 by U.S. District Judge Thomas Griesa.
A Manhattan federal jury in February found Cohen guilty of operating a sports betting business that illegally accepted bets and wagers on sporting events from Americans over the Internet and telephones.
Cohen, originally from Long Island, New York, lives in San Francisco.
He was the first defendant to stand trial in a series of Internet offshore sports gambling cases brought under the federal Wire Wager Act.
Under that law, it is illegal to use telephone lines in interstate or foreign commerce to place sports bets. The act also outlaws the transmission of information that helps gamblers bet on sporting events and contests.
Manhattan U.S. Attorney Mary Jo White said the case showed that sportsbook operators who take bets from Americans could not avoid the federal wager law by taking their business overseas.
``An Internet communication is no different than a telephone call for purpose of liability under the Wire Wager Act,'' she said. ``As this case demonstrates, persons convicted of operating Internet sportsbooks offshore face very serious consequences -- imprisonment and thousands of dollars in fines.''
Prosecutors alleged Cohen and other defendants tried to skirt U.S. law by running their operations from jurisdictions that allow gambling, such as Curacao, Panama, the Dominican Republic, Antigua and Costa Rica.
According to evidence presented at the two-week trial, Cohen's company solicited Americans through the Internet site www.sex.com and through a toll-free telephone number.
Prosecutors said Cohen's business also advertised in U.S. newspapers and magazines. The ads said U.S. customers could open a betting account with the company, wire money to fund the account and then bet on U.S. sporting events and contests.
Prosecutors said undercover FBI agents accessed the Internet sites and found information about betting on professional and college sporting events such as basketball, hockey, baseball and football.
The undercover agents then opened accounts by transferring money via Western Union. They placed wagers on the games from computers and telephones in New York.
Cohen and 21 other defendants were indicted in 1998 for their alleged involvement in offshore sports betting operations. Ten of the defendants previously pleaded guilty to conspiring to break the wager law.
Three have pleaded guilty to related misdemeanor counts and seven remain fugitives, including Steve Schillinger, vice president and director of wagering for World Sports Exchange.
Schillinger told Reuters late last year that the company does not believe that what it is doing is illegal and that the federal government does not have jurisdiction over the offshore business.
He said the operation took annual bets of between $100 million and $200 million.

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