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Safe Ports Act – Online Gambling in Canada

Author: LegalEase Solutions 

Introduction

Our client is a Canadian resident who is a paid endorser for an online gambling company based in the British Virgin Islands.  The online gambling company operates legally in the jurisdiction where it is located (British Virgin Islands.)

The company chose to continue to accept wagers from people in the US, and certain of their endorsements/advertisements air in the US.  The research is regarding the potential liability that the client may face/incur by continuing to endorse the company based on the newly enacted law in United States: Safe Ports Act. Since the Safe Ports Act is a newly enacted statute, there is a dearth of case law interpreting and explaining the law. Thus reference was made to secondary sources such as law review articles.

Question Presented

Will an individual who endorses/advertises an online internet gambling company with US clients, be liable under the Safe Ports Act under the theory of aiding and abetting?

Short Answers

The liability of the endorser is based on his knowledge that the online gambling which he has endorsed is an illegal activity in US and that his endorsements/advertisements would be aired in the US.

Discussion

Title VIII of Safe Port Act makes internet gambling an unlawful act.  Unlawful internet gambling is defined in Sec. 5362 (10) (A) as placing, receiving, or otherwise knowingly transmitting a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received, or otherwise made.

When the revenue from online gambling websites exceeded $ 6 billion in 2003 and was projected to reach more than $ 7 billion in 2004, numerous American corporations began accepting advertisements from offshore gambling websites in the late 1990s. Megan E. Frese, Rolling the Dice: Are Online Gambling Advertisers “Aiding and Abetting” Criminal Activity or Exercising First Amendment-Protected Commercial Speech?, 15 Fordham Intell. Prop. Media & Ent. L.J. 547,550.   However, the United States Department of Justice (“DOJ”) warned media trade groups in June 2003 that accepting advertisements from gambling websites might constitute “aiding and abetting” illegal operations. Id.

Aiding and abetting of an illegal activity is punishable under 18 USCS § 2, which reads:

  • 2. Principals

(a) Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.

(b) Whoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal.

The elements of offense of aiding and abetting are: (1) the specific intent to facilitate the commission of a crime by another; (2) guilty knowledge on the part of the accused; (3) that an offense was committed by someone; and (4) that the defendant assisted or participated in the commission of the offense. United States v. Raper, 676 F.2d 841,849 (D.C. Cir. 1982).  “The mens rea of aiding and abetting is guilty knowledge”.  United States v. McDaniel, 545 F.2d 642,644 (9th Cir. 1976).  The requirement on the part of the aider is sufficient knowledge and participation to indicate that he knowingly and willfully participated in the offense in a manner that indicated he intended to make it succeed.  Raper,  676 F.2d 841,849 (D.C. Cir. 1982)

Under the Safe Port Act, any kind of online gambling (other than certain exception) is an illegal activity.  Advertisements and endorsements may be considered as vehicles that transport the illegal activity to the public at large.  Therefore, endorsement or advertisement of an illegal activity may also be prohibited and any person who does so may be liable under the Aiding and Abetting Statute.

KNOWLEDGE IS THE DETERMINANT FACTOR FOR LIABILITY UNDER THE AIDING AND ABETTING STATUTE

Our client by endorsing/advertising online gambling which is an illegal activity in the US, may be found to have participated or assisted in the commission of the illegal activity, thus violating the aid and abet statute.  However, it is the aider and abettor’s state of mind that determines the liability. United States v. Corbin Farm Service, 444 F. Supp. 510,524 (D. Cal. 1978).  Therefore, if our client can show that he did not have knowledge that his endorsements/advertisements would be aired in the US, where it is declared an illegal activity, or that online gambling was illegal in the United States, he may escape liability under the aiding and abetting statute.

Conclusion

The Safe Port Act declares online gambling an illegal activity in the US.  The liability of the endorser is based on his knowledge that online gambling which he has endorsed is an illegal activity in US and that his endorsements/advertisements would be aired in the US.