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Published on: 3/1/2007
Last Visited: 3/29/2007
The United States Court of Appeals for the Second Circuit (the "Second Circuit") affirmed the judgment of the United States District Court for the Southern District of New York (the "District Court") which held that Jay Cohen, the director of an offshore sports betting Website conspired to violate and violated the terms of 18 U.S.C. §1084 (Internet Gambling Law).Jay Cohen, a business located in Antigua accepted bets from United States citizens over the telephone as well as from bettors on the Internet.The Second Circuit held that Jay Cohen violated the provisions of 18 U.S.C. §1084 by means of the Internet and telephone to transmit calls and accept bets from bettors in New York, where gambling is illegal, to the World Sports Exchange in Antigua, where gambling is legal.
18 U.S.C. §1084 (a) states that: "(a) Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both."
18 U.S.C. §1084 (b) provides, in part, that Section 1084 does not prohibit the transmission of "information assisting in the placing of bets or wagers on a sporting event or contest from a state or foreign country where betting on that sporting event or contest is legal into a state or foreign country in which such betting is legal."
Jay Cohen, the Defendant, was the President and one of the owners of World Sports Exchange ("WSE"), an organization engaged in the business of offering "bookmaking" services on United States sporting events.
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Due to Jay Cohen's active role in the activities set forth above, the District Court convicted him for breaching the substantive provisions of 18 U.S.C. §1084(a) which inter alia prohibit: (a) using a wire communication facility to transmit in interstate or foreign commerce betting or wagering activities aimed at United States residents; (b) engaging in wire communications that allow the recipient to receive money or credit by way of a bet or wager; and (c) providing information to assist in the placement of bets or wagers by United States residents.Jay Cohen appealed and raised several contentions in his appeal, all of which were denied by the Second Circuit.
Among Jay Cohen's contentions was that his activities did not conflict with the provisions of the statute since he fell within the ambit of the safe harbor provision of 18 U.S.C. §1084 (b).He further argued that his conduct was protected by §1084 (b) since every instance of betting occurred in Antigua and that the only nexus between New York and Antigua, was the delivery of information that supported in the placement of a bet in Antigua.
The issues were: (a) whether the District Court properly instructed the jury to disregard the safe-harbor provision contained in §1084(b); (b) whether the provisions of §1084 applied to Cohen's conduct; and (c) whether transmission included both the receipt of information and the transmission of such information, and whether the rule of lenity (i.e. that in construing an ambiguous criminal statute, the court should resolve the ambiguity in favor of the defendant) requires a reversal of Cohen's convictions.
The Second Circuit held that defendant violated §1084 by using both the Internet and telephones to transmit calls from bettors in New York to the World Sports Exchange in Antigua.Cohen was sentenced to a term of 21 months in prison.
The Second Circuit further held that Section §1084 (b) did not provide Cohen with a safe harbor since the information in issue was transmitted to and from New York, where gambling is illegal, and also since such information composed the actual bet itself, and not only the information that helped in the placement of a bet.It also specifically found that bettors sent wagers over both the Internet as well as via telephone lines.The Second Circuit also found that Cohen had the essential mens rea to commit the crime in question.
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