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The US States Want Control
The advent of the internet introduced new methods and ways to conduct business. Communications, order placements, and processing for businesses that only involved paperwork, such as banking, insurance and financial services in general, benefitted greatly.
As did the gambling companies. Access to the internet suddenly enabled them to engage with a seemingly unlimited market. A golden era was dawning.
However, governments around the world woke up to the fact that their traditional jurisdictional rights were being undermined by the internet. Suddenly, their citizens could engage in activities that were, until then, controlled exclusively by their laws.
They needed to get the situation under control. Laws were being broken and tax revenues missed!
Internet and the Law
There was a suspicion in the mid-1990s that the internet was more of a threat than a benefit.
All this illegal activity – and seemingly no way to put an end to it – was driving the US states to distraction.
Fearing a loss of revenue, and attempting to protect their traditional jurisdictions, a few US states would claim jurisdiction over the internet and then criminalise offenders.
But how could the internet be controlled?
Controlling and regulating internet transactions would only be possible, if they could control the flow of internet data traffic. The problem was that any efforts, by a state, to control the data flowing across their borders, while remaining a participant in global e-commerce, would likely involve a lot of government resources; that is: it would be very complex and hugely expensive.
The alternative would be to pass laws and legally pursue participants of internet activities of which they did not approve.
First Attempts
In 1995, the US state of Minnesota attempted to assert jurisdiction over what looked like the entire world.
Newspapers at that time reported: “You bet it’s illegal”, said Hubert H. Humphrey III, Minnesota’s computer-savvy attorney general. Humphrey claimed jurisdiction over anything illegal that popped up on a computer screen in his state.
The Minnesota Attorney General’s Office posted an official warning stating: “Warning to all Internet Users and Providers. Persons outside of Minnesota, who transmit information via the Internet, knowing that information will be disseminated in Minnesota, are subject to jurisdiction in Minnesota courts for violations of state criminal and civil laws.”
The assertion of jurisdiction rested on the Minnesota general criminal jurisdiction statute, which provides that “A person may be convicted and sentenced under the law of this State if the person … (3) Being without the state, intentionally causes a result within the state prohibited by the criminal laws of this state.” MINN. STAT. ANN. ? 609.02,
Minnesota’s attempt to assert jurisdiction over the entire internet highlighted a critical tension between local laws and global commerce.
This approach revealed a major challenge for online businesses: they could now be subject to prosecution, not just in their home country, but in any jurisdiction where their services reached.
For online gambling, this legal uncertainty was particularly perilous. Companies suddenly faced the risk of legal action from state or national governments across the world, each with its own laws and enforcement strategies.
Prosecutions
As a test case, Humphrey’s office filed suit against Granite Gate Resorts, a Nevada gaming company that had stated its intentions to offer online sports betting from a server in Belize.
Granite Gate actually backed down, after threat of prosecution, as did many other defendants that Minnesota had sued at the same time, for a variety of online consumer frauds.
So, initially, this approach seemed to be effective; but only within the US states. According to Samuel A. Guiberson, a criminal defence lawyer, the approach sidesteps an underlying issue.
“If US prosecutors want to try foreign nationals, for the content they put at play on the Internet, then be prepared for some prosecutor from Afghanistan to yank college sophomores out of Iowa, because the words on their Web pages are crimes in that society.”
Despite this apparent paradox, this was only the beginning of get-tough moves at the state level.
NAAG’ing
Humphrey prodded the National Association of Attorneys General (NAAG) to set up a new working group to study the law-enforcement issues posed by the Internet. It became NAAG’s most heavily subscribed group, pulling in 40 of the nation’s attorneys general.
Five subject-matter committees were created, along with an executive staff committee (chaired by Minnesota’s Purcell) to coordinate their work. According to Purcell, the most serious obstacle to fighting cybercrime is a critical shortage of resources, training materials, and staff expertise. “Only a handful of states around the country have computer crime experts in their state crime labs,” he says.
Nevertheless, the US felt that it could flex its muscles when its residents are involved. They initiated prosecutions of six US owned internet sports gambling companies based in the Caribbean and Central America
The indicted would include one particular operator located in Antigua: Mr Jay Cohen.
